Euronews Explains Shrinkflation, Skimplfation And Stagflation

Many countries are dealing with the effects of inflation, now at a 40-year high. What that means is that you get less bang for your buck and you are now getting even less value on goods.

Photo Insert: As the name suggests, everything remains stagnant and does not move much. In economic terms, it means high inflation, economic stagnation, and high unemployment at the same time.

Basically, prices go up when there are shortages and/or there is a large demand for goods or services. Inflation is measured by how expensive goods and services have become over a certain period of time, usually a year, Pascale Davies explained in a recent Euronews article.

If you are a Swiss chocolate fan, you may remember when Toblerone in 2016 looked a bit different; it no longer resembled the Alps and had the gaps between triangles widened. While the cost of the chocolate bar did not go up, it shrank from a net weight of 170 grams to 150 grams.

This is a classic case of what is called "shrinkflation," when the volume or size of a product shrinks. It can be seen as a little more sneaky, as consumers are less likely to weigh a product and notice the difference compared to a price hike.

"Skimpflation" on the other hand is when companies "skimp" on the quality of the product or service. One of the main reasons this happens is because companies cut back on the quality of the service so it can still be profitable, meaning less money for staffing or materials are cut back on.

If stagflation is defined as a recession accompanied by inflation, then it is important to know what a recession is. While the word can cause alarm, recessions are a natural part of the economic cycle.

A recession is technically defined by two successive quarters having contracting gross domestic product (GDP) results but not all countries. Issues arise if low growth is combined with unemployment or high inflation, in what is known as stagflation, which is much rarer.

As the name suggests, everything remains stagnant and does not move much. In economic terms, it means high inflation, economic stagnation, and high unemployment at the same time. Stagflation can happen if there is a recession before the rate of inflation has gone down to where central banks want it to be.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic