Inflation eating my favourite things
I’ve been in a reminiscent mood all last week, thinking about all the things I like. So please indulge me a little bit whilst I list a few of my favourite things: Vanilla Teatime Biscuits, Shirley Original, baked nuts, sno-cones –– coconut was always first choice for me, Chefette beef and potato roti, Purity whole wheat leadpipes, and fishcakes. There are others, but these are the ones I tend to consume most often these days, with the exception of the sno-cones.
As you know, once one starts engaging the brain, it often leads to very interesting outcomes more often than not. As the neurons were firing away, it hit me that everything on my goodies list had undergone some sort of metamorphosis over the years. As if by nature, I recognized that all these changes were in fact real-life examples
of inflation in action.
All of us know inflation as the persistent increase in prices and money wages. I would go out on a firm limb and guess that more of us know and experience the price rise part of inflation much more than the wages raise side of things. It is commonly referred to as too much money “chasing” too few goods and services.
In practice, it really is too much money spent “chasing” too few goods and services. This type of inflation is technically referred to by economists as demand-pull.
There is indeed another type of inflation that perhaps is more applicable in our case in recent times which is cost-push inflation. This relates to the cost of inputs increasing, which are then usually passed on to consumers through higher prices.
Most people may tend to think these to be separate types of inflation, but they are inextricably linked.
With Barbadian households seemingly in for a rough ride, businesses have had to be cognizant of the demand for their goods and services whilst bearing the declining level of disposable income and their own profit margins in mind. This is by no means a recent phenomenon, but in the current environment could no doubt contribute to greater consumer dissatisfaction.
Faced with pressure on both sides, with increasing input costs and demand from consumers for lower prices due to reduced disposable incomes, businesses have adopted a strategy of keeping nominal prices relatively unchanged whie reducing the quantity, and in some instances the quality of product offered to the consumer.
So let me now indicate why inflation is ruining my favourite things. Last week, I went to the Chefette Drive-Thru in Oistins and ordered what I thought was a roti and paid the same price as usual. On opening the package to start munching at home, I looked at it and surmised that Chefette was now selling “rotettes”, because this thing was so small it fitted snuggly in the palm of my hand.
But even though whilst eating it, I felt as if I was only dirtying my mouth, happily the quality and taste were
I also love Purity whole wheat leadpipes, and recall the days when they were first introduced more than ten years ago. The leadpipe used to fill the bag to the point where it was sometimes almost bursting out. What is particularly amazing, if not amusing, is the fact the size of the bag has remained unchanged whilst the actual leadpipes have shrunk with each passing year.
We’re still paying the same price at the till under the illusion that prices are the same when in fact inflation is eating away the leadpipe right before our very eyes. Next time, you’re in the supermarket, check and see that the leadpipe is now only about
three-quarters the length of the bag.
I’m happy to report though that the quality and taste of the leadpipe is still the same as when it was first launched.
Teatimes are now just over the size of a silver dollar; sno-cone cups and baked nuts bags have got smaller; but the quality and taste have remained the same the last time I checked. As for the Shirleys, I haven’t yet detected any reduction in size or quality. However, the size of the house, once the rest of the biscuit has been eaten, looks smaller in my hand. Obviously, this is because I have grown up and my hands have got larger and so I cannot blame inflation for that.
(As an aside, it is quite a challenge for an adult to eat around the Shirley biscuit leaving the house intact. Perhaps it’s only me. It seemed much easier when I was younger.)
Lastly, I come to fish cakes. Prices have gone up and the quality has diminished significantly. You just can’t find good quality fishcakes these days with actual fish in them.
I know the price of salted cod, or salt fish, has increased significantly over the years, but that certainly cannot be the reason why consumers have to endure bad-tasting flavoured dough masquerading as fishcakes. So to all vendors of fishcakes, the quality, in my view, is important first, and then price. I would prefer to eat three or four good-sized quality fishcakes for $5 than ten dough balls filled with oil for said $5. This is indeed the worst kind of inflation where quality is compromised in the product offering.
I assume that Chefette, Purity and others have conducted market research before embarking on these product downsizing tragedies. I am certainly one who wouldn’t argue with the data, but at what point does the data start to buck the trend so to speak.
I am not inclined to purchase these items at their current and future smaller sizes if I don’t feel satisfied after consuming them, even if the quality remains unchanged.
So, as a consumer, I have to be prepared to pay more for the level of utility I want to experience rather than being slightly disappointed after each interaction. I certainly cannot blame the business executives for keeping (nominal) prices unchanged so that consumers can still continue their patronage. This kind of action may be considered good corporate social responsibility, but that is left up to consumer advocates to advance that reasoning it they so desire.
These days, value for money is very important to both consumer and producer. Despite the best intentions of business owners, the customer’s perception of value for money should be first and foremost in your minds.
As a professional economist, I understand the various pricing strategies employed by firms over time. However, taking off my economist hat and putting on the consumer one, paying more for the same amount is much more tolerable than paying the same for a lesser amount.
In essence, let the consumer choose the amount they want and pay the price accordingly. So whether it’s a large or small roti, leadpipe, etcetera, the consumer will choose that which presents him with the highest level of satisfaction, given their budget constraint.
(Ryan Straughn is a UWI Cave Hill and Central Bank of Barbados-trained economist.