“Whackflation”, “foodflation” or “slumpflation”: a new word for the world economy

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An enthusiastic pandemic Stagflation With general vocabulary. Unless you’ve spent the last few years in a cave, the general public knows that the term refers to the coexistence of weak economic growth (stagnation) and sharp rises in prices (inflation). The current economic situation can also be defined by the entire set of phenomena ending in “-flation”. overview.

The pandemic has also hit the global economy, and as the system tries to recover, price volatility continues. This is what the journalist on Bloomberg’s “Odd Lots” blog said:whackflation“,” Hitting “means just a big blow, a kind of punch. Oil perfectly illustrates this notion that prices can experience significant drops and dramatic spikes.Crude oil barrels are currently worth Over $ 100The price is Minus in April 2020In the middle of a crisis.

In this series of ascending and descending, it is rather the first to dominate now. Natural materials, especially agricultural products, and therefore food. It is here”Food ration┬╗Continuous rise in food prices, rising faster than general inflation levels.

Camouflage inflation

Therefore, companies are facing increased production costs. They can raise prices at the risk of losing market share. If you have enough room, you can reduce the margin. Some have found a parade that camouflages the rise in product prices. Three “ShrinkflationIt’s about reducing the size of products and packages. Consumers will continue to pay the same price, but with less material. “Reduce” means to reduce or reduce in English. We are talking about “ShrinkflationIn good French.

Shrinkflation can be seen when the new product is placed next to the old product, but the trick is confusing when looking only at the new packaging. Three “cheapflationIt constitutes a more inconspicuous variant of “shrinkflation” to accommodate the deterioration of product quality. Weight and size do not change, but expensive materials are replaced by low quality elements, which makes them cheaper for producers. For example, finish olive oil and hello low-end fat. “Cheapflation” can be revealed by carefully reading the composition of the food. Readings that can be complicated if the font size is also “shrinkflated”.

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Artificial wealth

More generally, the very uncertain period we are currently experiencing is “Slump fractionThat is, a period of inflation that coincides with a long-term decline in production. Some kind of stagflation didn’t work.Above all, this collapse (translation of “slump”) can occur after a period of artificial enrichment called “slump”.Debt Flation“.

Liquidity injections by central banks and cheap debt (thanks to low interest rates) have led to an increase in the real estate market. Buyers can more easily provide the requested equity, but in this context they are also indebted to buildings that can be overvalued. If this mechanism goes down, there is a risk of encountering liquidity issues by raising interest rates and terminating central bank support programs (both planned or already in place in the US and Europe). ..

Finally, this artificial wealth has the opposite effect.Tax systemThis happens when taxpayers move to higher income levels and is therefore taxed at a higher tax rate.