This page has been archived and commenting is disabled.

How Corporations Are Masking Inflation… Without the CPI Moving

Phoenix Capital Research's picture




 

Since 2007, the world’s Central Banks have collectively put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.

 

This kind of money printing is literally unheard of in modern history. And it has set the stage for a roaring wave of inflation to hit the financial system. Indeed, the first signs are already showing up... not in the “official” Government data (which is bogus) but in how those who run businesses around the globe are acting.

 

Most people believe that when inflation hits, prices have to go higher. This is true, but higher prices can be manifested in multiple ways. Firms usually do not simply raise prices in nominal terms as price elasticity can kill revenues because it would hurt sales.

 

Instead, companies resort to a number of strategies to maintain profit margins without hurting their sales. One of them is to simply leave part of a package EMPTY, thereby selling LESS product for the SAME price (a hidden price hike).

 

Food manufacturers, like the politicians currently debating health reform, may have a solution to the obesity crisis: Feed Americans a lot of hot air. But this heated air is not just a figure of speech for packaged goods companies including Ralcorp Holdings' (RAH) Post Foods and PepsiCo (PEP) subsidiaries Frito-Lay and Quaker.

 

In many packaged products, as much as 50% of the contents is just empty space, an investigation by Consumer Reports reveals. And we consumers are buying that nothingness every day.

 

http://www.dailyfinance.com/2009/12/08/how-much-for-the-air-as-much-as-half-of-food-packaging-is-empty/

 

Another tactic corporation use is to simply sell smaller packages for the SAME price (another means of selling less for MORE= a price hike).

 

U.S. Companies Shrink Packages as Food Prices Rise

           

Large food companies have recently announced that they will raise the prices they charge grocery retailers for commodities-based products. For example, a chocolate bar will cost more soon: Hershey last week announced a 10% increase for most of its confectionery goods.

 

Of course, straightforward price hikes could cause consumers to buy less of those products or to choose less costly store brands. So in many cases, food companies are trying a different tactic: Keeping the price of an item the same while decreasing the amount of food in the package. The company recoups the costs of the rise in commodities and hopes consumers don't notice that they're getting less of the product for the same price.

 

http://www.dailyfinance.com/2011/04/04/u-s-companies-shrink-packages-as-food-prices-rise/

 

However, perhaps the most scandalous policy employed by companies looking to engage in stealth price hikes is to swap out higher quality ingredients for lower quality/ lower cost alternatives. One bigname coffee maker was caught doing this just a few years ago.

 

Reuters is reporting that many of America's major brands have been quietly tweaking their coffee blends. While most coffee companies consider their blends trade secrets, and are loath to disclose exactly what goes into them, both circumstantial and direct evidence suggests they're now substituting lower-grade Robusta beans for some of their pricier Arabica, and degrading the quality of our coffee…

 

At least one coffee roaster has admitted it. In November, Massimo Zanetti USA, which roasts for both Chock full o'Nuts and Hills Bros., publicly confirmed upping its Robusta usage by 25% this year.

 

Why the switcheroo? Prepare to not be shocked. The answer is: price.

 

Last year, a shortage of Arabica caused prices of the premium bean to spike as high as $3 a pound -- $2 more than what a pound of Robusta would cost. This compares to a five-year historical trend of Arabica costing closer to 70 cents more than Robusta. In recent weeks, the trend has reversed, with Arabica prices falling to just a 62-cent premium over Robusta.

 

http://www.dailyfinance.com/2012/06/19/noticed-that-your-coffee-tastes-funny-heres-why/?a_dgi=aolshare_twitter

 

In simple terms, inflation is already around us, though it’s not yet showing up in LITERAL price hikes. Instead, we’re all paying MORE for LESS. And this won’t show up in the official numbers for some time.

 

For a FREE Special Report on how to protect your portfolio from inflation, swing by

www.gainspainscapital.com

 

Best Regards

Phoenix Capital Research

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 03/20/2014 - 11:53 | 4572702 rsnoble
rsnoble's picture

Masking inflation: Cut jobs, wages, benefits, offshore, close plants, consolidate, less quality control, 10oz of potato chips in a 20oz size bag, government subsidies, etc etc etc.

Thu, 03/20/2014 - 10:55 | 4572284 JerseyJoe
JerseyJoe's picture

haven't the world's Central Banks printed closer to $20T?   China alone according to these hollowed pages accounted fro $15T.    I am I missing anything?  

Thu, 03/20/2014 - 10:23 | 4572139 lemarche
lemarche's picture

YEAH THAT IS SO TRUE "PHOENIX CAPITAL"...

AND THEY ARE ALSO TAKING OFF FREE GOODIES SUCH AS "FREE STICKERS" FROM CEREAL BOXES !!!

WHICH I PERSONALLY FIND OUT-RAGEOUS ! ! ! ! !...

 

.....

Thu, 03/20/2014 - 07:13 | 4571595 AdvancingTime
AdvancingTime's picture

After much thought I have come to the conclusion that while inflation appears tame and is not showing up in a big way the seeds have been planted, and the number of them is somewhat shocking. Inflation lurks beneath the surface and is hidden away in the dark corners of our future. Want to know where the real cost of things is going, just look at the replacement cost from recent storms and natural disasters.

Several things to consider when trying to understand inflation come to mind, first competition tends to keep price increases in check, and our slow growth economy is helping the consumer in many areas. People concerned about inflation down the road point out that an increase in the speed or velocity that money moves about the economy or where money flows could change all that. The atricle below delves deeper into this subject.

http://brucewilds.blogspot.com/2013/06/inflation-lurks-beneath-and-hidde...

Thu, 03/20/2014 - 11:04 | 4572332 overmedicatedun...
overmedicatedundersexed's picture

look that's the cooks job to shop for food, as long as the right wine is served and our coffee  is mocha, life is good, sadly we had to cut the cooks salary because the food budget was a bit high last month..ta tah.

Thu, 03/20/2014 - 09:07 | 4571841 d edwards
d edwards's picture

It would seem to me by hiding this product price inflation the manufacturers are doing CYA for the gov't mismanagement of the economy.

If the inflation was plain to see, people would be really pissed of at the 0blahma regime.

Wed, 03/19/2014 - 21:25 | 4570365 Vendetta
Vendetta's picture

don't forget the 'strategy' of globalization is all the pricing headroom to hide inflation by destroying manufacturing jobs here and outsourcing it all to slave wage labor markets.   Nice little inflation hider.

Wed, 03/19/2014 - 19:51 | 4570031 New_Meat
New_Meat's picture

Since all of this information is "priced into the market" don't you think that this would get back into the finance guys--they being so rapacious and all

- Ned

Thu, 03/20/2014 - 13:18 | 4571815 Comte d'herblay
Comte d'herblay's picture

If you suspend disbelief and think there is actually a 'market' and not a masquerade. 

If you factor in multiple manipulations, there is no real market other than the appearance of one to keep a semblance of an auction.

The top Jews on Wall Street have an iron grip on the 'market' because they make it, contort it, twist it, and bend it to their will.  

You don't think these guys are actually gambling, do you?

Wed, 03/19/2014 - 18:37 | 4569811 Mad Muppet
Mad Muppet's picture

Note to grocery stores and food producers: For fucks sake, just go ahead and raise the God-damned price. We're going to blame it on the Government anyway, so you're covered. I'm sick of the normal 2lb can of coffee getting closer and closer to one pound.

Thu, 03/20/2014 - 10:25 | 4572146 Mi Naem
Mi Naem's picture

Reminisce:

1/2 Gallon of ice cream

Pound of coffee

Pound bag of chips

Pound bag of frozen veg (still exist, but virtually extinct for brand names)

...etc.

I think a lot of careless folks buy by the package rather than the pound or actual volume.  Must be, 'cause I don't understand how this could be effective otherwise.  People too busy to look at what they are actually buying. 

Wed, 03/19/2014 - 17:41 | 4569644 fukidontknow
fukidontknow's picture

I've heard that blending a little horse into the hamburger works a treat.

Wed, 03/19/2014 - 19:14 | 4569945 Dr. Sandi
Dr. Sandi's picture

Have you scoped out the price of real horsemeat lately? The demand in Europe is driving it through the barn roof.

Wed, 03/19/2014 - 20:02 | 4570071 ThorAss
ThorAss's picture

C'mon, everybody knows the price of horsemeat is not stable.

Wed, 03/19/2014 - 20:42 | 4570189 divingengineer
divingengineer's picture

It's the goddamned horse meat speculators driving the pice up. They should have just hooked them up in the farm bill.

Wed, 03/19/2014 - 16:16 | 4569305 Quantum Nucleonics
Quantum Nucleonics's picture

The biggest way in which inflation is "hidden" is via a decline in real income.

Wed, 03/19/2014 - 23:14 | 4570830 Blood Spattered...
Blood Spattered Banner's picture

Bingo.  Corporations get top and bottom line revenue by squeezing more productivity out of us, and paying us less in the process. 

Wed, 03/19/2014 - 16:01 | 4569248 kurt
kurt's picture

Here's why:

The "stimulus" went to those who don't spend it.

Come up with a stimulus that goes to those who do spend it and you will get two things, stimulus and inflation in certain areas

Wed, 03/19/2014 - 15:59 | 4569238 PatientZero
PatientZero's picture

They simply increase the amount of shit in the "food" we buy to make it less food and more shit. Now I get to pay for empty space too?

You're too much, NWO. When are you going to dump aborted fetuses into our food supply? Cow too expensive? Well the cops just shot some poor guy, let's cut him up.

Sick fucks.

Wed, 03/19/2014 - 14:56 | 4568891 Carl Popper
Carl Popper's picture

Taco Bell's chicken soft tacos have been a noticeably lower quality meat for months now, stringy, extra spices to help with flavor (which don't help) and drippy.  You can no longer eat them safely while driving. 

 

Long John Silvers fish sandwich has only a very thin film of tartare sauce. 

 

Chili's fajitas are such low quality they poison you with all the pepper they put on them.  

 

Look around.   You will see "hedonic adjustments" everywhere but no inflation lol

Thu, 03/20/2014 - 08:57 | 4571798 Agstacker
Agstacker's picture

I quit buying Campbells chicken soup, the chicken pieces are nasty, gritty little cubes and it tastes way different that what I remember.

Thu, 03/20/2014 - 07:28 | 4571617 AdvancingTime
AdvancingTime's picture

bottom-line is that it is hard to know what is in our food. I'm aware that we have inspectors, but for fun, and to stretch your imagination, think about a distant future at a time that food is scarce. In such a situation we might not look as closely or ask as many questions. I could go on but, sometimes writing less is more. Below is an article on this subject.

http://brucewilds.blogspot.com/2013/03/horse-meat-and-soylent-green.html

Wed, 03/19/2014 - 15:44 | 4569167 Antarctico
Antarctico's picture

Taco Bell's chicken soft tacos have been a noticeably lower quality meat for months now, stringy, extra spices to help with flavor (which don't help) and drippy.  You can no longer eat them safely while driving. 

Long John Silvers fish sandwich has only a very thin film of tartare sauce. 

Chili's fajitas are such low quality they poison you with all the pepper they put on them.

 

Blargh -- I just threw up in my own stomach. How can you eat this shit? There has to be some dead, furry thing squashed on the side of the road along your daily commute. You should scrape it up, put it in a bowl, and upgrade your diet.

Wed, 03/19/2014 - 17:10 | 4569524 withglee
withglee's picture

In my neighborhood the cost of spray paint has gone up due to a stimulus the economists probably didn't incorporate in their models.

People here can no longer afford to drive to market so they walk. Along the way they spray a spot on all the road kill they see. On the way back, any road kill they see without a spot, they know is fresh.

More protein in the pot tonight!

Wed, 03/19/2014 - 19:13 | 4569942 Dr. Sandi
Dr. Sandi's picture

If spray paint gets too expensive, how the hell can vandals afford it?

And without vandals, there's nobody left to paint the peeling walls during the 'slow recovery.'

Wed, 03/19/2014 - 16:04 | 4569264 kurt
kurt's picture

You should try Adalbrainto's Farting Cockroach Taco's with Diarrhea Splat!

Wed, 03/19/2014 - 14:17 | 4568650 withglee
withglee's picture

Just got my house eskrow reconcilliation:

County Taxes: Up 15%; School Taxes: Up 17%; Insurance: Down 32%.

Looking more closely, over the last 4 years:

County Taxes: Down 8.5%; School Taxes: Down 12.7%; Insurance: Up 76%

These are just a couple data points but it illustrates difficulty trying to gauge INFLATION by looking at its effects. Since we know INFLATION is equal to DEFAULTs - INTEREST collections; we know INTEREST collections but we don't know DEFAULTs; all we need to do is measure DEFAULTs and adjust INTERST collections accordingly.

We'll bask in the comfort of knowing INFLATION is zero at all times everywhere ... and INTERST is exactly what it should be ... not some made up number by LIBOR.

Of course, since we have this enormous counterfeiting leak where government is printing money to cover banksters bad bets, we have no clue where we are regarding INFLATION  ... just that it is enormous.

Wed, 03/19/2014 - 15:40 | 4569121 withglee
withglee's picture

Surprised to get any negatives on this. It's just actual numbers to show the difficulty (impossibility) in measuring inflation.

Taxes going down don't suggest less government. Where I live, taxes are related to real property values. These have been decimated over the last 4 years with the burst of the real estate bubble and governments haven't been able to raise their rates to compensate.

They've been pretty creative in revenue generating schemes: right turn cameras; speed traps; registration, seatbelt, insurance, inspection checks, rolling over debt, etc.

Wed, 03/19/2014 - 16:45 | 4569406 cynicalskeptic
cynicalskeptic's picture

My assessed valuation went down somewhat since '07 - and subsequently recovered a bit.  There were even a few minor drops in taxes paid from year to year but the OVERALL trend has been MUCH higher - local property taxes have TRIPLED here over 20 years (and they were damn high in the first place).  NY has had 'limits' on local property taxes for the past few years but major games are being played to get past the 'limits' and 'reduce spending' (drawing from 'reserves' is a big ploy with school districts).

You're now getting 'fee' overload on everything - local building permits are far more expensive and required for EVERYTHING.  Car registrations and license plate fees are downright obscene now and you're going to get a ticket for anything and everything - local cops are seen as revenue generators (you can always plead down a point offense to non point as along as you're willing to pay $$$$$ on the fine).

Heating oil prices have almost quintupled over the time we've been here - far outpacing gasoline and electricity bills are onerous.

Wed, 03/19/2014 - 17:03 | 4569489 withglee
withglee's picture

My property is in Harris County Texas 25  miles from the center of Houston. If I used a 10, 15, or 25 year window, tax increase and insurance increase would be dramatic ... but lately ... erratic.

Today I bought a battery to replace a 6yr battery I bought 3.5 years ago. It cost 35% more and further is now warranted for 2 years ... not 6 years ... the very same battery. Not only that, they changed the designation of the battery and my battery was discontinued ... batteries look identical. They couldn't pull up the warranty information. I pressed them. They finally found a way and sure enough, I had a $45 credit coming for unused warranty.

Food ... gas ... beer. All have increased dramatically. Solution? Remove them from the INFLATION calculation.

We are dealing with an enormously complicated system. Every individual and organization is a trader reacting in different ways to different stimulus. And every one of those elements is operating with a different and far from constant time constant. So there is absolutely no way to know what INFLATION is. Prices sure aren't going to tell you ... and no computer model will tell you either.

There's only one proper thing to do. Monitor DEFAULTs and immediately collect an equal amount of INTEREST. Thus, INFLATION can't be anything but zero by the relation: INFLATION = DEFAULT - INTEREST.

Unfortunately, economists think 2% is the right value for INFLATION. A frigging 'mazing!

Wed, 03/19/2014 - 15:53 | 4569212 The Abstraction...
The Abstraction of Justice's picture

The clue is the 15% of money that was created to give to the banks. That the inflation rate, 15%.

Wed, 03/19/2014 - 16:47 | 4569412 withglee
withglee's picture

Under what condition was it "given" to the banks? If they return it (did they promise to return it?) and it is extinguished .... INFLATION = 0% due to promises made (and kept) by the banks. I personally think is was counterfeited and the banks feel no obligation to return it. But it's secret. A properly managed MOE is "not" secret.

Wed, 03/19/2014 - 14:15 | 4568633 elwind45
elwind45's picture

Taking lead out of everything really pushed back the control date?

Wed, 03/19/2014 - 14:13 | 4568619 elwind45
elwind45's picture

Yesterday news? Manufacturers are working on the outsides of containers ? More color and more stupid phrasing and made up hype words. Now they are pushing experience on the outside knowing ADD kicks in and less is more?

Wed, 03/19/2014 - 14:01 | 4568543 Comte d'herblay
Comte d'herblay's picture

On a tangent note, I've noticed a particklerly egregious form of Stealthflation in the publishing industry.

During the last several years best selling authors have sold their 'brands' to co-authors. Both names appearing, sometimes 3 names supposedly writing the book.  

Then there's the dead author who wrote the Spenser series, his name right there on the cover but the book is written by a completely different human bean.

And on Sunday I saw for the first time ever,  a book written 10 yrs ago by a now best selling author. It's old title was replaced with a new one, surfacing at #15 on the list with a completely brand spanking new title:  same garbage inside the book, no editorial changes or updates. They simply capitalized on the autor's new found fame, and reissued an old work that didn't sell at all, because it was poorly written, and still is.

It appears the only way to make a decent living is to lie, cheat, steal. 

There should be a Major for this in universities, with courses in financial fraud, Power of attorney malfeasance, Jewish usury, CDOs, 200xx derivatives, Subprime mortgages with ZIRPS, and all taught byproven pros,  the imprisoned, who would be released now that their skills have to go mainstream.

 

Wed, 03/19/2014 - 13:51 | 4568482 I Write Code
I Write Code's picture

I remember going through the inflation/shrinkage issue with candy bars in the 1960s!  Not really any different than shaving the edges off gold coins.

The substitution is just "reverse hedonism".  The Fed therefore must recognize it and raise the CPI accordingly, even if prices have not changed!

Heck, Windows 8 is enough reverse hedonism that it justifies raising the minimum wage to $10.10 - omg, that must be exactly where it came from!

Wed, 03/19/2014 - 16:51 | 4569440 cynicalskeptic
cynicalskeptic's picture

They're shaving down bars of soap now.  Dial bars have a big scoop taken out of the back of the bar now.

Was shocked to see sugar coming in 4 lb bags now instead of 5.

 

Seems like th eonly thing going DOWN in price is heroin.  Lots of stories in the local press about the new 'plague' - and how it's hitting hard in the burbs.  I guess increased supply and ease of transport since we've been in Afghanistan led to an increased supply.  And with the increase in price and  crackdown on Oxy you're seeing one of those 'substitutions' they talk about in calculating the CPI........Heroin is cheaper than prescription Oxy so users are changing over and taking advantage of lower prices......lol

Wed, 03/19/2014 - 18:52 | 4569879 ClassicalLib17
ClassicalLib17's picture

Post Shredded Wheat and Bran, the tallest cereal box on the shelf,  and when you open the box the actual product only fills half

Wed, 03/19/2014 - 19:09 | 4569935 Dr. Sandi
Dr. Sandi's picture

But the half box of factory air is smog-free, and that's 'priceless.'

Wed, 03/19/2014 - 18:30 | 4569782 drdolittle
drdolittle's picture

Heroin also kills off junkies better. You never no the purity whereas a 30 oxy is a 30 oxy. So, you can do "this much" safely until a new, purer batch arrives then several die. Cheaper than treatment.

Wed, 03/19/2014 - 13:40 | 4568434 pashley1411
pashley1411's picture

I don't like, but understand, manufacturers hiding inflation.

They live and work under the same unicorns-in-rainbow-land Stasi thumb as our compatriots in Venezula.

Wed, 03/19/2014 - 13:39 | 4568430 withglee
withglee's picture

Most people believe that when inflation hits, prices have to go higher.

Inflation "hits" immediately when DEFAULTs are not met with INTEREST collections. The operative relation is: INFLATION = DEFAULT - INTEREST.

Since we have no measure of DEFAULTs, we have no way of knowing what INFLATION is. The first approximation is to measure prices. This is difficult and prone to error and manipulation.

Step (1): Measure DEFAULTs

and know: a rollover of a trading promise "is" a DEFAULT.

Step (2): Immediately collect INTEREST equal to DEFAULTs.

otherwise, you will have non-zero INFLATION ... instantly.

Wed, 03/19/2014 - 19:07 | 4569930 Dr. Sandi
Dr. Sandi's picture

Technically, it's not a default when the gov buys your bad paper at full face value. Ask your favorite mortage packager for more details.

Perhaps this is called 'socialized default.'?

Thu, 03/20/2014 - 12:46 | 4572084 withglee
withglee's picture

Correct, it's not a DEFAULT. It's counterfeiting. The government is getting (creating) certificates with no backing promise to complete a trade. They are allowing the bond holders and mortgage holders to complete their trade ... but then they are DEFAULTing themselves.

Wed, 03/19/2014 - 13:04 | 4568261 combatsnoopy
combatsnoopy's picture

Speaking of inflation, Los Angeles has been experiencing "inflation" aka ROBBERY through CAP AND TRADE. $5/gallon of gas.

http://www.sltrib.com/sltrib/world/57655646-68/tax-cap-trade-prices.html...

http://www.losangelesgasprices.com/

Los Anglees already has the country's HIGHEST unemployment rates.

http://www.bls.gov/lau/stalt.htm

And the ugly racist, yuckie, grossie, collectivist hippie socialists ARE here.    I said "NO!!!"
I cannot afford to escape the socialist boomer made hole. 

Wed, 03/19/2014 - 13:45 | 4568387 lasvegaspersona
lasvegaspersona's picture

lost me at 'boomer'....you are obviously pissed...but it sounds like you can't make up your mind at whom or what....this boomer paid for his parents soc sec and is now looking forward to a retirement with none....Socialism fucks everyone ...we did not ask for higher benefits back then...we just ignored things...like most of the country is doing now.

Wed, 03/19/2014 - 18:45 | 4569847 ClassicalLib17
ClassicalLib17's picture

I purchased the duplex that my parents were renters in,  in 1986.  My father passed away in 1990, and my 93 year old mother is living comfortably next door to me, the good son, still paying the same $350.00 a month in rent she paid in 1986.  However, I don't qualify for any tax break for subsidizing my elderly mother's rent and pay full taxes on the $4200.00 I collect in rent.  I wish she would qualify for section 8,  I would have it made,

Thu, 03/20/2014 - 05:45 | 4571518 Comte d'herblay
Comte d'herblay's picture

If you're paying full taxes on the rent net of your expenses for Depr, utilities, etc. you need to revisit your tax accounting methods to lower them substantially, practically to nothing.

I've rented out my parents house for $10,000 a yr in rent and don't pay a dime. 

 

Wed, 03/19/2014 - 15:15 | 4568990 curbyourrisk
curbyourrisk's picture

Socialism might fuck everyone, but it fucks the YOUNGER generations longer.  As the boomers die off, we will be left to clean up thier mess.  Fuck them!

Thu, 03/20/2014 - 05:52 | 4571527 Comte d'herblay
Comte d'herblay's picture

The thing about socialism, for those like the young who will move thru their 5 score and 20 on earth, look to the Scandinavian countries for the "Frog in gradually scalding water" adjustment they make over time.

And unlike the frog they do not perish, but come to the realization that they don't really have to work for anything.

Their time is their own, to do what they like, all their survival expenses paid for. 

So too will the young in this country as job after meaningful job is usurped by lowest cost labor in 3rd and 4th world countries.  

Hundreds of millions of american human beans have no chance at a middle class income that will rise over time. Something has to be done about all those people who have nothing productive to do.

See Kurt Vonnegut for the outcome of this  scenario. 

Do NOT follow this link or you will be banned from the site!