Understanding Shrinkflation and Pricing Changes

The video discusses two types of inflation: the well-known inflation measured by the Consumer Price Index (CPI) and shrinkflation, where product sizes decrease but prices remain the same, effectively increasing the unit price. The Reserve Bank combats traditional inflation with interest rates, which are not included in the CPI. Shrinkflation is harder to detect and fight, as it involves subtle changes in product packaging. Examples include reduced sizes of cornflakes, matchboxes, and chocolate bars. The Bureau of Statistics attempts to account for these changes in the CPI but faces challenges. Consumers are advised to focus on unit prices and use calculators or shop online to make informed purchasing decisions.

What are the two types of inflation discussed in the video?

• Price inflation and shrinkflation

• Monetary inflation and deflation

• Demand inflation and supply inflation

• Cost inflation and wage inflation

How does the Reserve Bank attempt to control inflation?

• By printing more money

• By adjusting interest rates

• By reducing government spending

• By increasing taxes

What is shrinkflation?

• A decrease in product size with no price change

• A decrease in product size with a price increase

• An increase in product size with no price change

• An increase in product size with a price decrease

What is the impact of shrinkflation on unit price?

• Unit price increases

• Unit price remains the same

• Unit price fluctuates

• Unit price decreases

Which product was mentioned as an example of shrinkflation?

• Potato chips

• Bread loaves

• Crunchy nut cornflakes

• Soda cans

How does shrinkflation affect consumer perception?

• Consumers are indifferent to the change

• Consumers feel they are getting less value

• Consumers are unaware of the change

• Consumers feel they are getting more value

What does the Bureau of Statistics call the change in product size and quality?

• Market fluctuation

• Quality change

• Product variation

• Price adjustment

What example did the Bureau of Statistics use to illustrate quality change?

• Canned beans

• Tomato soup

• Frozen vegetables

• Bottled water

What is a simpler approach to understanding statistical changes in product pricing?

• Using complex algorithms

• Ignoring permutations

• Using fewer permutations

• Using multiple permutations

What is the typical response of statisticians to complex pricing changes?

• Simplify the data

• Use more data points

• Ignore the changes

• Focus on qualitative data