Monday, May 26, 2008

Who Ate All the Ice Cream?: The Hidden Inflation Factor

Like many Americans, our household enjoys a dish of ice cream now and again, but rising milk fat prices, and the commodity run-up in general has pushed carton prices skyward. We continue to buy the frozen treat, but have adopted the "only on sale" rule.

So, last week, when your Cheap Stocks editor was accused of single handedly devouring an entire container of Edy's, I had to remind my accuser of the following: What used to be the standard half gallon container was downsized a few years ago to 1.75 quarts. Hardly noticeable. But now, it seems as though the standard has shrunken even further, to 1.5 quarts. This, is noticable, at least it is to me. My accuser quickly apologized.

This is perhaps the worst kind of inflation: Inflation by "Deflation". The price stays the same, but the package gets smaller. Have not seen it this bad since the early 1970's.

Ice cream is certainly not the only product undergoing "package resizing". Many economists deny that inflation is back, but in this case, the consumer is the expert.


Doug the Second said...

Hey Clyde, I too have noticed something different about ice cream. Breyer's is my favorite brand of ice cream and about 4-5 weeks ago they downsized their containers. A little discouraging, but perhaps this will help me cut down on the bad habit?

David Merkel said...

I've seen it too... I was describing the phenomenon with candy bars in the 70s to my kids back in early 2008. Now they get to see it for themselves.

We are cutting back on ice cream from the vendors that are shrinking packaging, because shrinking the package is somewhat deceptive.