A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Tuesday, December 14, 2004

Hidden Inflation

Next time you go to the grocery store, go to the frozen food section and look at the ice cream. If you look real hard you might see something different. I'll give you a hint: (the size of the container is smaller). Ice cream companies have started putting their ice cream in 1.75 quart containers instead 1/2 gallon containers, which is really a significant price increase. I call this "sneaky" inflation because most people probably don't even notice.

How much of a price increase is this?

Before, 2 quarts (1/2 gallon) of ice cream sold for $3.98.
Now, 1.75 quarts of ice cream sells for $3.98.

To figure out the price per quart, simply do the following:

$3.98 divided by 2 = $1.99
$3.98 divided by 1.75 = $2.27

To calculate the percentage change in the price, do the following:


(New Price - Old Price)/Old Price


($2.27 - $1.99)/$1.99
$.28/$1.99 = .1407 or 14.07%

So, by reducing the container size from 1/2 gallon to 1.75 quarts and keeping the price the same, companies have raised prices over 14%!

Inflation is just a fact of life. But, I respect companies more if they just raise prices instead of being sneaky.

I won't buy the new size of ice cream. I will buy Blue Bell, which is still 1/2 gallon. In fact, they have now started putting "Still 1/2 gallon" on the side of their cartons.

That's my rant for the day. Until next time...