How to Hide a Price Increase

During 2019, playing the video game Fortnite, you would have paid $9.99 for 1,000 V-Bucks (the game currency). Now, rather surprisingly, in an inflationary world where prices are everywhere skyrocketing, those same 1000 V-Bucks will cost you $7.99. Fortnite said they wanted to save their customers the Apple app store surcharge.

Equally unexpected, some of their emote and skin prices remained the same. So, Fortnite was not necessarily inflationary…unless it was hidden.

Hidden Price Increases

Sometimes we might not know when price has gone up.

Extra Fees

WSJ tells us that we could be on the lookout for processing fees and Covid surcharges on restaurant checks. Or, as with Peloton, it is also possible that free delivery and set-up are no longer free. During February its website said that they cut the price of a bike but added a $250 fee. Meanwhile, Peloton’s delivery and set-up for certain treadmills got a new $350 price tag. Similarly, at the car dealership, a lower vehicle markup could be offset by unusually pricey accessories like mud flaps or cargo protectors.

Product Shrinkflation

Price increases could be camouflaged by smaller packages. The strong version of Cottonelle went down from 340 to 312 single-ply sheets and soft 2-ply has 16 fewer sheets:

Reduced by more than 2 1/2 ounces, Sun-Maid is selling us fewer raisins:

Hotel and Theme Park Shrinkflation

Not usually called shrinkflation, when hotels and theme parks reduce their services, it’s really the same thing. Some hotels encourage us to reuse our towels and won’t change the sheets during our stay. (But they do replace everything before the next guest.) Asked about price hikes, Disney said it was instead reducing portions and using substitute products. Perhaps taking a hint from the airlines, it was also charging reservation fees for certain popular rides while retaining its base ticket price. And in Orlando, Disney World eliminated its Magical Express free airport shuttle.

Our Bottom Line: The CPI

Recording inflation can be tricky. The 477 workers that track CPI prices for the BLS (Bureau of Labor Statistics) know how to be sure they are comparing the same item from one month to the next one. For example, with a can of soup, they check for 12 attributes that should remain the same like sodium content and size. However, the comparison becomes more difficult to quantify with product and service shrinkflation.

I wonder if they check Fortnite.

My sources and more: Thanks once again to Mason for his encyclopedia knowledge of Fortnite. It became the ideal complement for articles on hidden price increases and calculating the CPI.

Originally posted on the econlife.com blog, May 12, 2022

--

--

--

Located at the intersection of current events, history, and economics, econlife® slices away all of the layers that make economics boring and complex.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Data Visualization

How to Analyze an A/B/C test with Mean-Based Metric

Digital and data governance — Friends or foes?

Exploratory Data Analysis -FIFA20

Generalized Linear Models (GLM)

Peter’s R — Navigating RStudio

Poker Hand Rankings Texas Holdem Starting Hands Chart

Ranking

Back to school to become a Data Scientist. Is it necessary? [Part 2]

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Econlife Team

Econlife Team

Located at the intersection of current events, history, and economics, econlife® slices away all of the layers that make economics boring and complex.

More from Medium

Can Investing In Gamestop Make You Rich? — Millionaire

The price of security

How Not Talking About Money is Ruining Your Life — Fail Forward Finance

What’s goal-based investing and how to plan it?