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What inflation now looks like

I like those elongated cakes with raisins in them referred to on the package as “finger madeleines with raisins”. A few days ago I purchased another stash of them, from the Afghan-run corner shop nearest to me.

They looked like this:

Sorry about the strange blue reflections of something blue in the transparent but shiny packaging, but it is important that you realise that this is a photo of these finger madeleines before I opened them.

Same sized package. Same price. But, six empty spaces where there used to be six finger madeleines. Twenty four finger madeleines instead of thirty finger madeleines.

We are seeing quite a lot of this in the UK just now. Soon the packages and/or the prices will change, but meanwhile, the quickest way to adapt in the short run is just to reduce the amount in the package.

Brexit is not proving to be an economic catastrophe, and I remain very optimistic about it in the longer run, that being why I voted for it. But it is proving something of a dislocation in the short run, if only because the sort of people whose job it was to foresee it mostly did not foresee it. I don’t blame them for this. I did not foresee Brexit either. I merely voted for it.

43 comments to What inflation now looks like

  • Paul Marks

    British independence (which may happen in two years) has nothing to do with the Bank of England Credit Bubble.

    But, yes, the left (and their “Conservative” friends) may work to confuse the two.

    I suspect that the Evening Standard will play its part in the disinformation campaign.

  • Inflation can take this form; (you are more trusting than I to assume short-weight must be inflation, not corruption). If these ‘madaleines’ are as foreign as their name, this is the currency adjustment. There are gains and loses to that.

    “We are seeing quite a lot of this in the UK just now.” I’m not – but could be missing the examples you’re seeing. I’m not clear why Brexit would cause this at this time, except for things affected by Brexit’s impact on the Sterling’s currency level (which, AFAICS is not that great). If that’s what you mean, we’re agreed.

  • Gary Taylor

    What makes you think that the fall in sterling was caused by brexit? Standard economic theory says that was a long time coming due to the trade deficit. But maybe you know more that them?

  • The shrinking portions thing has been happening in the US too–I think I first noticed it maybe ten years ago. It’s slower here, though–stores have time to come out with smaller packages. Also, it was more common in California. Since I moved to Texas around four years ago I haven’t seen it as much (big surprise, I know).

  • bobby b

    “Same sized package. Same price. But, six empty spaces where there used to be six finger madeleines.”

    And you bought them.

    Think of this, not as inflation, but as haggling.

    When you last bought them, the seller proposed that you pay $X for 30 madeleines. You agreed.

    This time, the seller proposed to sell you only 24 madeleines for that same price. You agreed again.

    The seller might keep dropping that number until you say no. That’s just a market finding its correct price.

    If enough people had said “no” to the 24-pack, the 30-pack might return. That didn’t happen, which means the seller was leaving money on the table with the 30-pack.

  • It’s been going on for a long time in the US. You used to buy coffee by the pound (at least, when I was a kid that was the standard-sized can); nowadays the cans are 11.5oz. And they’re made of cheaper packaging.

    Likewise, what used to be two quarts of ice cream is generally now sold in 48 fl.oz.-sized containers. Tuna-fish cans used to be eight ounces; they’re down to five.

    And then there are the wacky ones. The last package of dryer sheets I bought in bulk announced itself as having 27 sheets free: 250 sheets in a normal package of 223. Obviously the company was intending to normalize the 223-sheet size. I think I’ve seen orange juice sold in 59-oz containers instead of a half-gallon, too.

  • Regional

    It must be remembered that food production is highly subsidised in Europe and America from Gubb’mints running massive deficits. Anyone see a problem?

  • Fred Z

    bobby b has it.

    It is immoral to let a consumer pay less than he is prepared to pay.

    I am Canadian. An American businessman was one asked by one of our lefty journalists “Why do American companies charge Canadians more than they charge Americans for an identical product?” Answer: “Because they’ll pay it.” Clear, concise, honest and correct in fact, law, logic and economics.

  • Mr Ecks

    Say you are a businessman. You make products. Your profit is not sales less overheads=profit. It is sales minus replacement costs ( of your raw materials etc).

    Thanks to political/bureaucratic scum constantly increasing the supply and thus decreasing the value of your ( and almost everybody elses) currencies then your replacement costs steadily if not spectacularly rise.

    You can increase your prices steadily but that will cut sales and leave you with less income from with to pay ever rising replacement costs. Or you can sell less product for the same money.

    This is worldwide and has gone on for years. The late Steven Jay Gould wrote an article decades ago about the price-stable yet size-decreasing Hershey bar.

    Actually no bad thing given how they taste,

  • Julie near Chicago

    I too will testify to the fact that in food and drink, package sizes have been diminishing noticeably over a period of at least 17 years, with every so often a further diminution, at the same price for awhile, and then either the price goes up or the package size goes down again. Too many people believe this is because the merchant or the manufacturer is Ripping Us Off! but if you point out that in both cases they’re caught between a rock and a hard place — should they raise the price and deal with yowling and boycotts, plus being unable to move as much product because the peeps can’t afford the price (or want or need to spend their bucks elsewhere), or should they keep the product “affordable” and maintain the price by diminishing the package size?

    Say this to people, even in words-of-one-syllable, and they glaze over, squinch their ears shut, and repeat the mantra. This time, louder.

    All that, of course, is only what Mr Ecks says just above. :>(

    If I may indulge in complaining, it makes it a bit hard on the cook, too, because she or he has recipes geared to the old sizes. *snarl*


    bobby b, your point is reasonable and something I hadn’t thought of, but it seems to me that a given spot in the supply chain (position as the retailer, distributor, warehouser, production company, actual producer, so forth) becomes ever more expensive (in current dollars) to hold, which means the the concern holding those spots have either to cut costs, improve “efficiency” at the cost of customer satisfaction, or else raise their prices.

    (Of course, they could — in certain cases — quit lobbying for ethanol subsidies. Go Ted !!! And various other “breaks” which cost them themselves when they go shopping.)

    And if the prices rise sufficiently, it gets to where people can’t afford nourishing food. (Case in point: Ethanol results in making tortillas very hard for some Mexicans to afford.)

    And the Bureaucratic Disease is infecting more and more businesses and levels within a business, which also results in angry customers, actual inefficiency, lost custom, increased cost, and more lost custom. –Oh, there’s lots more I have to say, but I imagine you’re all tired, so I’ll go quietly now. And it’s past my bedtime (dam the Time Change!).

  • Julie near Chicago

    Addendum: Not that I’m convinced that tortillas are, by themselves, all that nourishing. But look at the countries where people can’t afford proper food….

  • Lee Moore

    What makes you think that the fall in sterling was caused by brexit? Standard economic theory says that was a long time coming due to the trade deficit. But maybe you know more that them?

    Because it happened overnight as the Brexit votes were counted ? Indeed having retired to bed in a different time zone, when I woke up, I checked the FX rates before I checked the news, and it was from them that I realised that the forces of light had triumphed.

    Incidentally, Brian, this isn’ inflation. It’s a “nudge” from the Diabetes Prevention Commission.

  • Lee Moore (March 20, 2017 at 3:53 am), you were not the only one watching the FX rates that day. On the Saturday after, I learned of some very high volume purchases of UK goods that were phoned in that Friday “if you can agree the trade today” by people far-sighted enough to know the immediate drop would dissipate somewhat.

  • Mr Ed

    Those madeleines are a possible indicator, but not hard-baked proof, of inflation’s effects. But Ludwig von Mises himself wrote of similar phenomena in his personal experience (presumably the new Austrian republic).

    I have noticed a rounding of prices to round pounds, particularly in restaurant menus, and putting, say £4.50 as ‘4.5’, and the idiotic* but useful to retailers price of, say, £6.99 going to £7.

    * many, it seems, are highly sensitive to the 99p price point, despite the triviality of the penny.

    When you need a wheelbarrow for your madeleines is probably a sign that you are getting greedy.

  • Alisa

    I tend to agree with Mr. Ed here. I also think that this is possibly a mixture of the rising costs of inputs and of pure business opportunism. I think we would need to examine this case by case, and my guess is that we would find these two different factors at play for different products, as well as various combinations of both.

    I think that the real inflation – the one that made various basic consumer products more expensive in absolute terms – is long-term, and is a result of intentional, steady and world-wide (well, West-wide) depreciation of the various currencies by their governments, over many decades now. Forget packaging and clever pricing techniques – instead, just compare the price of a gallon/litre of milk at any point going back just a few decades and earlier, to its current price.

    The reason we can still afford not only basics like milk and bread, but also many extras like cellphones and madeleines, is technology – which is the product of pure human ingenuity and resourcefulness. We earn vastly greater amounts of those depreciated currencies in return for the same time and effort as before; while the other side of that same coin is the ability of producers to produce more and with greater efficiency even in the face of rising costs of inputs.

  • Plamus

    Alisa: “… (well, West-wide)…”

    I don’t know whether Venezuela counts as West, but Zimbabwe probably does not 😎

  • John K

    I believe the term for this is “shrinkflation”, a sort of hidden inflation.

    It’s been going on for some time. Mars Bars used to be massive, now they are a weedy remnant. However, I think Toblerone jumped the shark when they introduced a three triangle bar, and tried to blame it on Brexit.

  • Paul Rutherford

    —(1) Packaging must be so manufactured that the
    packaging volume and weight is limited to
    the minimum adequate amount to maintain the necessary level of safety, hygiene and acceptance
    for the packed product and for the consumer.

    It’s illegal and the law breaker can be fined!

  • Andrew Duffin

    I take it everyone else has also noticed how tiny Mars bar are these days.

    We are all starting to sound like the proverbial old man on the bus: “Back in my day you could get t’bus to t’cinema, see t’film, get thy fish supper on t’way home, and still have change from half a crown” etc etc ad nauseam.

  • John K


    Half a crown? Talk about inflation. My grandad assured me he could have a good night out on a shilling.

  • Lee Moore

    Alisa : I also think that this is possibly a mixture of the rising costs of inputs and of pure business opportunism. I think we would need to examine this case by case, and my guess is that we would find these two different factors at play for different products, as well as various combinations of both.

    This reminds me to make the banal point (I deal in little else) that the immediate cause of inflation is…..shopkeepers putting their prices up.
    As Alisa says, businesses choose to put their prices up for a variety of reasons. The theory that an increase in the quantity of money causes inflation relies on an indirect mechanism – ie if businesses put their prices up faster than the increase in the quantity of money (OK times velocity) then people will buy less and businesses will be forced to rescind their price increases.

    But there are always folk experimenting to see if they can get away with higher prices. Or experimenting to see if lower prices will cause a surge in sales. Some may call them opportunists, some capitalist jackals. But I call ’em the salt of the earth.

  • Mr Ed

    I have posted here before a picture of beer prices at decimalisation (c. 1970) from a Suffolk pub showing that a pint was around 11 or 12 new pence after the change from the 240 pence pound to the centurion model. In the same pub, with gentrification and taxes (VAT, new since those prices and excise duty) a pint is around 400 pence now in 47 years, or a pound is, in beer terms, now but 3 pence in half a life time.

    A remote cousin of mine and his wife moved from England to Munich in 1975 on graduating, and lived in Germany for 20 years before moving to Australia. They have a ‘mental map’ of prices in England stuck in 1975, and are staggered by the prices when they come back to the UK and go in a shop.

    I have sometimes wondered if the sign that you truly ‘belong’ in a country that you have moved to is when you ‘think’ of prices in its currency, assuming that that has changed.

  • Alisa

    Some may call them opportunists, some capitalist jackals. But I call ’em the salt of the earth.

    Amen to that – nothing wrong with opportunism, let alone capitalism.

  • John B

    …Madeleine declines.

    And nothing at all to do with he Government Food Nazis strong-arming manufacturers to reduce product and pack-size, and sugar, salt, fat content to save us from the Obesity Monster which apparently is a greater threat to the Planet than Global Warming?

  • Patrick Crozier

    Pippa Malmgren has been chronicling “shrinkflation” on her Twitter feed since long before the Brexit vote.

    Having said that, I have always regarded Brexit as a case of short-term pain, long-term gain.

  • Kevin B

    Mars will shortly be bringing out a *NEW*, *ECONOMY SIZE* Mars bar for a higher price, and the *REGULAR* one will eventually disappear. After a brief period of grace the new one will start to shrink and the cycle will begin again. It’s just a matter of altering a setting on the machine.

    This has been going on since I were a lad. A long time.

    As for your madelaines, Brian… They look a bit iffy to me. As if someone has nicked a few cakes and re-sealed the bag.

  • Cal Ford

    I can only echo the others who have said this is nothing to do with Brexit, and we should keep saying this constantly, because it’s just a brazen lie. The value of the British pound has been steadily falling against the dollar since mid-2014 (and against the Euro since Nov 2015). I expect QE has had a lot to do with this. Brexit gave things a little bit of a further shove, but this is a long-term decline:


    (It can also be seen from this that the ‘Brexit fall’ was soon corrected, and after that the pound continued the gradual decline it’s been on since mid-2014. From a long term perspective the ‘Brexit fall’ disappears.)

  • RRS

    The weight is on the label.

    In some U S stores (to assist self service) the shelf price tag shows the price per once or quart or some base measure as well as the package price.

    One thing affecting the packaging, tending toward minimal, is the cost of shelf space in stores.

  • RRS

    @Cal Ford:

    In another forum (on Bitcoin!)I have raised the point that amongst currencies, like the concept of comparative advantage for commodities (and some services); there is for currencies the issue of comparative utility.

  • KrakowJosh

    One wonders if the reduction in madeleines is simply the prelude to an abridged edition of A La Recherche du Temps Perdu?

  • Laird

    In response to Lee’s “banal point”, I feel compelled to respond that, banal or not, it is entirely wrong. “Shopkeepers putting their prices up” is not the “immediate” cause of inflation; in fact, it is not a “cause” at all. Higher prices may be an effect of inflation, or they may be due to some entirely different cause (as Alisa and others have already discussed), but they are never a cause of it any more than are higher wages. This is yet one more example of the common error (intentionally promulgated by some, I suspect) of conflating prices (or the CPI or some other indicator) with inflation. To quote Milton Friedman, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” The only source of inflation (in this fiat money age) is government.

    If the price of something came down (such as we see regularly with computers and other electronic devices), would you call that a cause of deflation?

  • Julie near Chicago

    Yes, Laird. Exactly. It’s like saying the rash is the cause of the measles.

  • Paul Marks

    As I have said – the Bank of England Credit Bubble has been built up over many years, it has nothing to do with British independence (which has not even happened yet).

    The inflation, in all its hidden forms, is caused by the Bank of England Credit Bubble.

  • Lee Moore

    I beg to differ with Laird and Julie.

    Printing money may be the ultimate cause of inflation, but for an actual rise in the general level of prices to happen, you need intermediate links in the chain of causation – lots of individual actual prices to rise. Which involves conscious decisions by folk selling stuff.

    This can be demonstrated easily enough by considering what happened in commie countries. Lots of money was printed, but prices were set by the government. What happened ? No the price of bread, and accommodation and clothes and electricity and so on did not magically manage to rise without anyone actually putting the prices up. Instead, goods were sold out very quickly, there were long queues, and empty shelves. There were shortages.

    In measles, the rash is the immediate cause of the itching. The measles is the cause of the rash.

    These intermediate steps in the chain of causation explain why an increase in the money supply takes time to affect prices, why it doesn’t affect all prices equally or at the same time and causes changes in relative prices, according to who gets their hands on the newly printed money first and what it is that they want to buy.

  • Laird

    Lee, my objection was (and remains) to your describing higher prices as a “cause” of inflation. They are merely an effect, just as a rash is an effect of the measles. The rash may, in turn, result in itching, just as higher prices may result in consumer distress, but those are second-order effects; in neither case is the symptom the cause of the malady. The failure to understand the underlying cause inevitably leads to error, be it in medicine or economics. I stand by my earlier comment.

  • Lee Moore

    your describing higher prices as a “cause” of inflation

    This may be the simple misunderstanding that is dividing us. I am not saying that higher prices (generally) is a “cause” of inflation. Higher prices (generally) is inflation, by definition. What I am saying is that the immediate cause of higher prices (generally) is lots of individual decisions by sellers to put up their prices. We are agreed that the underlying cause of higher prices (generally) aka inflation is an increase in the money supply. It is this increase that allows sellers to mostly get away with their price rises, without having to rescind them in the face of a fall in demand consequent on the price rise (for when there is more money the demand doesn’t fall at the higher price.).

    So :

    Inflation = Higher prices (generally) – this is an identity not a causal connection
    Lots of individual seller decisions to raise prices are the immediate cause of inflation
    More money chasing the same quantity of goods and services is the underlying cause of inflation

    The reason for harping on about the intermediate steps is that additional money printing does not land in all pockets in exact proportion to existing holdings of money. It arises first in government pockets and goes first to increase demand for what the government wants to spend money on. And then it flows to the suppliers. And only by a long an indirect chain does it eventually feed into wages and the pockets of those who buy bread and gas. Thus money printing changes relative prices along the way as it ripples through the system, as well as changing the absolute general price level. Failure to appreciate the mechanism by which money printing leads, by trickles and eddies, to a rise in the general price level leads to error.

  • Laird

    And I’m saying that you’re wrong. I’ve given you the technical definition of inflation. You choose to use an entirely idiosyncratic one which merely causes confusion. (And in your first post you specifically stated that inflation is the “cause” of inflation; hence my original post. Now you’re backtracking.) Inflation and higher prices are most emphatically not an identity.

    I agree with your last paragraph, though.

  • Lee Moore

    Laird : I’ve given you the technical definition of inflation.

    No you haven’t. You merely quoted Friedman thus : “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

    This is not a definition. The first half of the sentence is a categorisation. (“An eagle is a type of bird” is not a definition of an eagle.) Friedman then goes on to explain that inflation “can be caused only by a more rapid increase in the quantity of money than in output.” Not an identity or a definition but an attribution of cause.

    You choose to use an entirely idiosyncratic one

    No the bog standard one, as five seconds of googling will reveal. Inflation is a rise in the general price level.

    And in your first post you specifically stated that inflation is the “cause” of inflation;

    No I didn’t. I said :

    “the immediate cause of inflation is…..shopkeepers putting their prices up”

    Now you’re backtracking.

    No I’m not. I still say exactly the same. Inflation is a rise in the general price level. A rise in the general price level is the result of lots of individual decisions by sellers in all sorts of markets to put up their prices The immediate cause of inflation is all those individual decisions. The effect is a general rise in the price level aka inflation.

    Inflation and higher prices are most emphatically not an identity.

    “Higher prices” is imprecise. Prices of some goods can rise and prices of other goods can fall without the general level of prices changing. This is not inflation, because …inflation is a rise in the general level of prices. The identity is inflation = a rise in the general level of prices.

    I am glad you agree with my last paragraph.

  • Laird

    Your comments demonstrate precisely why almost no one truly understands what inflation is, and thus why it is impossible to get it under control. Inflation is always and solely an artifact of a government’s profligate printing of fiat money. Everything else flows from that, and is mere effects. All you’re describing is the transmission mechanism, not the root cause. But because mainstream economists (and the politicians to whom they pander) have succeeded in convincing you and almost everyone else that the only possible source of money is government, inflation seems to be as inevitable and unseen as the air. And we will never be rid of it.

  • Mr Ed


    From what I have read and heard on the media, inflation is a mysterious, invisible dragon that appears from nowhere to haunt economies. Although it can appear at times of low interest rates, (i.e. rigged, arbitrary interest rates set by a central bank or similar institution), there is no connection between low interest rates and inflation. But it is whispered that this invisible dragon can be scared off by raising those nice low interest rates, and every now and then that has to be done.

    And a recession, is it (as commonly portrayed) a symptom of a receding tide of fiat money revealing the rocks on which many a business founders as prices change, or the receding ‘tide’ of money itself when there is a ‘credit crunch’? Better not to navigate in shallow waters on a high tide, but it is so much fun to do that and it all looks so much fun to explore those creeks without a paddle.

    Perish the thought that ‘inflation‘ means at root, an inflation of the money supply, be it Spanish gold from the Indies or nothing more than entries on a Central Bank ledger.

  • PersonFromPorlock

    I noted when the housing bubble burst that our (US) currency was already inflated, we just hadn’t noticed; and that either house prices fell to traditional levels (payments of 25-30% of the resident’s income) or prices and wages generally rose to match those of housing. It looks as though the latter is what’s happening, albeit wages are rising with their usual sloth.

    We are still adjusting to a crypto-inflated currency (to coin a phrase), but at some point package contents and package price will once more be in balance.

  • Paul Marks

    As Frank Fetter (and others) tried to explain to Irving Fisher….

    Inflation is NOT “prices going up in the shops” according to some form of price “index”.

    Inflation is an increase in the credit-money supply regardless of whether prices go up in the shops or not.

    For example the massive inflation in the late 1920s (or in the run up to 2008) was NOT reflected by price rises in the shops.

  • Laird

    Paul, thanks for jumping in to back me up here. Better late than never!