Subnostr

And I bet the decent snacks' price is rising more in line with M2 expansion rather than the CPI. Either that, or they are starting to replace the quality ingredients with inferior substitutes surreptitiously.

Libertariman 2y ago

M2 money supply is inflating at a 4.3% clip annually, so that is pretty fast.

The prices of snacks, including the good ones, are sticky compared to M2 inflation speed.

But I agree that anything that is comparably desirable and scarce will increase in price faster than things that are commodified.

The confectioneries that have been around for decades and centuries understand branding and they tend not to shrinkflate or substitute with inferior ingredients.

They usually purchase specific ingredients from a specific farm.

That's part of the reason they've been around for so long!

But with commodified food, yes, shrinkflation is getting really bad.

An example that I like to pick on is Natto, the Japanese soul food that is sold in all supermarkets in Japan.

Go to an average supermarket and it'll be hard to find natto made with Japanese beans (American or Canadian is common now).

It used to be the opposite just a few years ago.

Go to a higher-end supermarket (Seijyo Ishii, Kinokuniya, etc.) and one can find Japanese natto there.

https://void.cat/d/SFmSfw136oxXUSzkYCTMsD.webp

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Discussion

Dash 2y ago

Thank you. But how are the high end brands keeping prices low compared to monetary debasement? That debasement has to show up somewhere. I guess the owners of the brands are getting poorer or they are paying their staff lower salaries (below the true rate of inflation) or possibly using the new immigrant appreciate visas to lower labor input costs. The net result is an impoverished work class Japanese society, although the privileged buyers of high end sweets may be blissfully unaware of this.

Dash 2y ago

Apprentice visas*

Dash 2y ago

Working class*

Libertariman 2y ago

This is because things go up in price at different speeds and to different degrees (i.e., not everything will increase in price by the same degree as inflation, which is an increase in the money supply).

There are a couple of things at play here, and I'll touch on several, taking a few points from both macro and micro.

If the money supply increased by 2x overnight, an average cantillionaire wouldn't go to the supermarket and buy 2x the amount of bread (or sweets, continuing with the previous conversation). They would spend it on things like stocks, real estate, LV bags, 911s, or bitcoin.

So, for these goods that are favored by the cantillionaires, their prices will increase in line with or exceeding M2 growth.

Relative to commodities, high-end snacks are closer to these scarce and desirable goods, and therefore they would increase in price more in line with CPI than commodified sweets. The cost of the ingredients in making the high-end sweets has not risen as much compared to the sales price of the finished good, so they are still able to maintain margins.

At a micro level, companies will continue to innovate and apply kaizen to their processes. So, if the pace of efficiencies gained from innovation and kaizen outpaces that of M2 inflation, that will also work towards keeping prices lower than inflation.

Dash 2y ago

Thanks. That makes sense.