How world ran out of everything… Inflation concealed with smaller packages

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How World Ran Out of Everything…

In the story of how the modern world was constructed, Toyota stands out as the mastermind of a monumental advance in industrial efficiency. The Japanese automaker pioneered so-called Just In Time manufacturing, in which parts are delivered to factories right as they are required, minimizing the need to stockpile them.

Over the last half-century, this approach has captivated global business in industries far beyond autos. From fashion to food processing to pharmaceuticals, companies have embraced Just In Time to stay nimble, allowing them to adapt to changing market demands, while cutting costs.

But the tumultuous events of the past year have challenged the merits of paring inventories, while reinvigorating concerns that some industries have gone too far, leaving them vulnerable to disruption. As the pandemic has hampered factory operations and sown chaos in global shipping, many economies around the world have been bedeviled by shortages of a vast range of goods — from electronics to lumber to clothing.

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Inflation concealed with smaller packages

Consumers are paying more for a growing range of household staples in ways that don’t show up on receipts – thinner rolls, lighter bags, smaller cans – as companies look to offset rising labor and materials costs without scaring off customers.

It’s a form of retail camouflage known as “shrinkflation,” and economists and consumer advocates who track packaging expect it to become more pronounced as inflation ratchets up, taking hold of such everyday items such as paper towels, potato chips and diapers.

“Consumers check the price every time they buy, but they don’t check the net weight,” said Edgar Dworsky, a consumer advocate and former assistant attorney general in Massachusetts, who has been tracking product sizes for more than 30 years. “When the price of raw materials, like coffee beans or paper pulp goes up, manufacturers are faced with a choice: Do we raise the price knowing consumers will see it and grumble about it? Or do we give them a little bit less and accomplish the same thing? Often it’s easier to do the latter.”

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Canary in the Biden mine: Costco is seeing inflation abound, impacting a slew of consumer products

Don’t tell Costco executives that inflation is low.

The big-box club chain said it’s been seeing accelerating prices across a range of products, including shipping containers, aluminum foil and a 20% spike in meat prices over the past month.

“Inflationary factors abound,” CFO Richard Galanti said on the company’s fiscal third-quarter earnings call Thursday.

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