Las Vegas, Nevada 2021-11-27 00:10:14 –
(NEXSTAR) – What is inflation? Almost all prices and everything is up now.. It’s obvious in petrol pumps and grocery stores. But more sneaky forces are also working – power economists are calling for shadow inflation.
Shadow inflation is a type of inflation that is much more difficult to grasp in the consumer price index. This is because the prices of goods and services may not change, but the quality is degraded.
Let’s say Daniel Manaenkov, an economics researcher at the University of Michigan, is checking in at a hotel. “I used to come to the hotel to greet and chat with people at the reception. Every morning I had a decent sized continental breakfast and sat in the lobby watching other guests.
“If you check in now, the queue can be long. There is only one overworked agent. Breakfast options are limited. You are at the nearest table a few meters away from you. You’ll be sitting alone. “
The hotel may also have discontinued daily room cleaning services due to COVID risk and / or staffing issues. Also, access to the gym may be restricted, so you’ll need to sign up for a time frame rather than just appearing. And, probably because of social distance, you’re lined up six feet apart at the check-in counter, and now the line is meandering outside when it’s cold and raining.
These small changes are summed and difficult to measure. But after all, even if the room rates haven’t changed, there will be less amenities during your stay. That is shadow inflation.
The same thing is happening in many restaurants during the COVID era. The price of the menu may have gone up or stayed the same, but now guests are asked to take their table by bus or order by QR code instead of the server.
“Most of these attributes aren’t shown because they aren’t actively measured by statistical agencies, but I personally find that they are using poor quality services,” Manaenkov said. Mr. says.
There is also another sneaky type of inflation currently underway.Shrinkflation.. At that time, the manufacturer makes the product smaller instead of raising the price. Therefore, the serial box can go from 19.3 ounces to 18.1 ounces – As with General Mills cereals This year – prices remain the same and customers are often unwise.
Combining shadow inflation, shrinkflation, and regular old inflation, this year isn’t as good as last year. Will things go in the opposite direction? If so, it will happen slowly, Manaenkov explained.
“The consumption pattern is sticky,” he said. This means that people are always expecting what they have so that the server will receive the order when they are seated in a nice restaurant. But COVID has forced us to change our way and adapt our expectations and habits quickly.
“We’ve gone through that stage of breaking tastes, and people have embraced the new format, so I don’t think it’s necessary to go back, at least for many,” Manaenkov said. The market can slowly retreat if customers demand more amenities in dollars and there is ample competition, but that has not yet been seen.