It's inflation Jim, but not as we know it!

Anyone with even a vague understanding of economics will understand that, over the last 50 years, inflation has been one of the major issues facing the UK and the rest of the world. Whether it be cost-push inflation, demand-pull inflation, stagflation or hyperinflation, the arguments are well rehearsed. Now however, there seems to have emerged a new type of inflation which is not based on an increase in prices.

Many consumers have always suspected, and more often than not their suspicions are well-founded, that in times of increasing production costs, many manufacturers will resist the temptation to pass on the increase in costs to their customers. Instead, they will offer less for the same price. Recent examples are to be found in the confectionery market where the average weight and size of many chocolate bars has fallen as the price of cocoa has soared. Many household products are now presented in smaller packages yet the priced remains the same. Cigarettes are still sold in packs of 20 but just how much shorter are the cigarettes compared with ten years ago?

Of course, despite the fact that the prices on the packets have not increased, the real cost of the items have and this is, therefore, inflation. Just how far can manufacturers push the limits before consumers become aware of what is happening and what should we call this type of inflation? Answers to me with the best winning a small prize!