At this point, finding anything which hasn’t been touched by inflation and the cost of living crisis is a hard task.
With inflation at a 40-year high of 9.1%, and expected to only keep rising until the autumn, it’s not exactly surprising.
But it’s not just about getting less bang for your buck as there’s now a new term on the scene – “skimpflation”.
Let us explain.
Simply put...
Inflation means the cost of goods and services goes up.
Skrinkflation means you pay the same amount, but receive physically less in exchange.
Skimpflation is similar – you pay the same amount but the quality has gone down, particularly when it comes to services.
Where does the term skimpflation come from?
Planet Money podcast from US radio NPR coined the phrase in 2021, describing it as a “stealth-ninja kind of inflation”.
Consumers experiencing skimpflation “pay the same or more for services but they kinda such compared with what they used to be.”
Where do you see skimpflation?
Alan Cole, a writer a Full Stack Economics, pointed out that the most common example is “having to wait longer for things” – as with delivery times.
He first observed this on a family trip, where he noticed “rest stops were struggling to keep up the same level of service that they had before”.
But he soon realised it also refers to other parts of day to day life, including a reduction in clothes quality or finding you can’t get through to a person at customer services for any brand.
Other examples include airlines reducing the number of air stewards, airports reducing staff numbers, causing huge queues – problems particularly obvious over the last few weeks in the UK – or the scrapping of free services, such as bike checks or waiter services.
Why is it a particular problem now?
Well, everyone is struggling due to the cost of living crisis including businesses, particularly as the prices of fuel and food soar.
Skimpflation appears to suggest the power is in the hands of retailers and hospitality, but many of these businesses are struggling, too. Unable to recruit new staff in the wake of the pandemic – when they may have made substantial layoffs – they are trying to keep their heads above water and stay profitable.
So, firms are left either passing the extra costs on to consumers or replacing services or materials with cheaper alternatives.
Due to competitive markets, firms do not want to drop their prices by too much, and so instead they reduce the quality.
Has anyone noticed?
Oh, yes – it may be more subtle than shrinkflation, but it’s pretty clear that people are not very happy about the way services are being run in the UK at the moment.
The NHS has been particularly scrutinised – this include waiting times for A&E, ambulance responses and low staff numbers – but the soaring cost of train tickets and service at airports have not gone unnoticed either.
The Customer Satisfaction Index, released by the Institute of Customer Service, showed complaints are a new high.
Around 16% of customers had complained of a problem with a brand’s service over the last six months, with other complaints coming in about quality issues or items being out of stock.
Quality, reliability and availability of goods and services are the main problems.