Skip to main content

Economy contending with Cancer of Shrink-flation

 Economy contending with Cancer of Shrink-flation




Our Economy is contending with cancer of Shrinkflation(Not only limited to FMGC sector it grabbed Auto & Real Estate sector too)


Shrinkflation- It is recently coined term in economy, it means situation of economy where Goods are available for same or slightly increase price but the quantity or size of good reduce at real time as compare to past. It shows Economy is at situation where Purchasing power of people not increasing in proportionate of price hike of goods this event occurs because of Inflation goes up in short period of time. 

In such case, where peoples Purchasing power stagnant or declining but prices of goods rises due to multiples events, Corporates of manufacturers trying to increase their sales by meeting consumers price point. To fulfil such goals manufactures come up with an idea by keeping price constant they reduce quantity or size of product. E.g.- If packet of 50 biscuits had price 100 rupees, but due to inflation manufacturer increase price to 125 Rupee for 50 biscuits. but consumers who have stagnant purchasing power they start avoiding to buy these biscuits and then sales of company starts declining. so to mitigate this problem company introduce an idea they start selling their packet of biscuits at 100 rupees but now their 100 rupees packet contains only 35 biscuits which earlier 50 biscuits. so impact of this consumer may start buying again these biscuit packet as it available at same earlier price.


Below are two actual examples of such events-


1. Few years back Honda shine 125CC On road price was around 72K INR, but now it reaches to 98K INR(FY 2023). Today 15th March 2023 Honda launch 99CC version at price point around 64K INR(may be ex-showroom price) by intension to sales may boost by this move. So company reduce the engine size to provide bikes at lower price.


2. Around 2008 Lehman Crisis in Pune's Real Estate 1BHK property had on an average carpet area of 600 Sq.Ft. Now in 2023 1BHK have on an average carpet area of 410 Sq.Ft. in Pune. So here also The carpet area's of real estates reduced developers to meet price point of consumers.

(Note: There is very less inventory of 1BHK properties in Pune now a days as compare to inventory of 2/3 BHK. This may sign of wealth imbalance and it may indicate there is group of consumers in economy who have demand of larger size property because they have better amount of purchasing power and less inventory of 1BHK shows there is lower demand of it due to consumers not have sufficient purchasing power to buy property) 


Shrinkflation is like an cancer, it is easy to get cure if detect early and get early treatment. But if it not treated in early stage then if is difficult to cure.


Mayur Jagtap




For regular and daily small update 

Comments

Post a Comment

Popular posts from this blog

Get Ready for Nifty to Land at 18K – Probability on Cards

  Get Ready for Nifty to Land at 18K – Probability on Cards 🧭 Introduction: The Calm Before the Storm? India’s stock markets have been shining for years. The Nifty 50 Index has risen from the Covid crash lows of around 7,500 in March 2020 to above 26,000 by early 2025. Investors, traders, and even casual onlookers have been celebrating this unstoppable rally. But here’s the question every serious market participant must ask: What if this rally reverses sharply? Could Nifty fall… all the way down to 18,000? It may sound extreme. But when we take a closer look — through the lenses of technical analysis, probability, and historical patterns — the idea starts to make sense. This article will break down this bold call in the simplest way possible, so you can understand the why , how , and what next of this bearish scenario. 🧠 Deep Technical Analysis of the Nifty Chart 1. 📏 The Black Line (18,000 Support) – Not Just Technical, but Psychological That thick horizontal line you...
Post a Comment
Read more

Dark Profits, Dark Propaganda: Wall Street and India-Pakistan

 Dark Profits, Dark Propaganda: Wall Street and India-Pakistan The recent India-Pakistan tensions, marked by "Operation Sindoor," are accompanied by intense propaganda and fake news from both sides. Beyond the immediate conflict, a darker side of capitalism, potentially involving Wall Street's interest in defense profits, subtly influences the narrative. While direct evidence is scarce, the economic incentives for conflict and the role of media ownership warrant consideration. Discerning real facts amidst the information war is crucial for understanding the underlying dynamics beyond the immediate security concerns. The recent surge in tensions between India and Pakistan, marked by the Indian military's "Operation Sindoor" in response to the deadly Pahalgam attack, casts a long shadow over the subcontinent. While the immediate concerns revolve around regional stability and the potential for further conflict, a deeper look reveals the insidious interplay of ...
Post a Comment
Read more

The Algorithmic Threat: How Social Media Endangers Democracy

  The Algorithmic Threat: How Social Media Endangers Democracy Social media platforms have become an undeniable force in our lives. They connect us with friends and family, inform us about current events, and entertain us. However, beneath the surface of connection lurks a potential threat to democracies: the algorithms that curate our online experience. These algorithms, designed to keep us engaged, can create echo chambers and filter bubbles. They prioritize content that confirms our existing beliefs, regardless of accuracy, and push us further away from opposing viewpoints. This can lead to increased political polarization, where people become entrenched in their own ideologies and distrustful of anything that challenges them. How what's app messages impact on opinion: Echo Chambers and Confirmation Bias:   People often connect with like-minded individuals on WhatsApp. Constant exposure to reinforcing messages can strengthen existing beliefs, making voters less receptive to...
Post a Comment
Read more