Hidden Inflation

Many individuals are aware of the most visible effects of inflation. They can tell you about how their grocery bill is rising, what it costs to heat their homes, or how expensive new or used cars have become. Less discussed is the impact of “shrinkflation” where something remains at the same value but may have fewer items included; the per item cost rises but may be unnoticed as the total price hasn’t change. A box of granola bars that previously had 10 bars included may now only have eight. This is effectively a 20 percent increase in price though the package price hasn’t changed. These are the inflationary prices you don’t immediately see on your receipt but will feel as you buy items more frequently. Another inflationary problem is “skimpflation,” which is harder to measure and is the reduction of a value or service that cannot be easily quantified. An example of this is fewer chocolate chips in your granola bar or a lower quality of ingredients used, reducing quality received but not reducing price paid. Skimpflation is slowly growing and can be observed with the degradation of paid subscription services, as premium alternatives become a hidden upcharge.

Inflation is the measure of the increase in prices over time, typically measured as the increase in price over one month or one year. If your wages stay flat over time, your buying power, or ability to purchase items, falls over time. The key inflation metrics most often cited are CPI, Core CPI, and PCE.¹ For the most part, shrinkflation is captured through the Bureau of Labor Statistics surveys that look at changes to package size and can capture the effective price over time. However, some forms of skimpflation may be missed, such as a sandwich with one fewer slice of deli meat or a frozen pizza with less pepperoni. These quality reductions often go unmeasured, but they leave consumers feeling like they keep getting less while paying more. That same pattern is now showing up across many services and subscriptions.

When ride-sharing services first became available through apps, they were a strong option for people who needed a ride from point A to point B. The app connected you with nearby drivers, and the first driver to accept the fare would pick you up. For many riders outside dense urban centers or far from taxi stands, these services made it easier to get home from dinner or other events without driving or dealing with parking. They also eliminated the need to call a cab and explain one’s location. With a few taps, everything was handled.

Today, ride-sharing options are broader, and some features make sense. If timing is flexible, you can wait longer and pay less. If you are willing to share a ride, you can reduce the cost.² However, as some options are useful given the increase in demand and can lower the price, others seem to increase the price for the initial basic service promised. Priority options promise a faster match. Faster than what? Before priority, standard meant the first available driver and a normal pickup. Now, the same standard ride can sometimes mean waiting 10 minutes for a driver, while priority gets a faster pickup for a higher price. The trip itself has not changed. The user is not paying for a longer ride, a better car, or added comfort. The only change is the promise of speed, yet that speed seems created by slowing the standard option. The result is a premium tier that feels like an upcharge for what used to be normal service. Your quick ride from point A to point B can cost more, without any clear improvement in what you receive.

Ride-sharing is not the only example of skimpflation and service degradation in today’s market. Streaming subscriptions were once a clear alternative to watching TV with commercials that interrupt a show. These subscriptions let you watch movies and series on the go, with no interruptions, and had an impressive library of content. However, over time, as the number of streaming services has grown, many libraries have thinned. Titles rotate out more often, with banners like “coming soon” or “last chance,” signaling that access is temporary. While some services introduced lower-priced plans with ads, a reasonable option for price-sensitive users, the true hidden cost comes when even a commercial-free subscription no longer guarantees a commercial-free experience. In some cases, watching ad-free content now requires an added charge. This is a quiet form of inflation that is not as easily tracked. You pay the same subscription price and receive less than the subscription originally promised.

Additionally, some online shopping and delivery subscription users are noticing more delays in what used to feel like fast delivery. Items that previously arrived the next day now often show up two days later. A premium subscription that promises prompt, free delivery now feels slower than what it used to. At the same time, faster delivery is available, but at a higher cost. Some users also notice that delivery benefits are becoming more limited by address, requiring all users to align to a single household. If a child is away at college, that college student may no longer receive the same delivery options. If you and your spouse live at different addresses for work, you may run into the same problem. This crackdown by address may now force households, once sharing a single subscription, to pay for multiple.

Another issue facing many consumers is that products that were once a one-time purchase are becoming subscription based. This move pushes people away from owning a feature and instead forces them to pay monthly for its use. For example, BMW had a short-lived program that charged drivers monthly or annual payments to activate heated seats that were already installed in the car, but it drew significant consumer backlash.³ The hardware was there, but access to the feature required ongoing payment. A similar move is now happening with Tesla. Elon Musk said that starting February 14, 2026, Tesla will no longer sell Full Self-Driving as a one-time $8,000 purchase and will instead offer it only through a subscription model, with the subscription currently priced at $99 per month in the United States.⁴ Since a Tesla has an expected life of 15+ years, an $8,000 one-time purchase averages to about $530 per year. A $99 per month subscription is about $1,200 per year, or about $17,800 over 15 years, far above the previous $8,000 one-time purchase.

Gamers are seeing a version of the same pressure. Some major titles, such as World of Warcraft and Final Fantasy XIV, require ongoing subscription payments to keep playing. This subscription to play the game differs from many games that require constant add-on costs to play without timing out. Some add-on purchases can allow new players to quickly outpace longtime players if the latter won’t spend the money on the available options. Previously, like BMWs and Teslas, the one-time purchase that gave you full access to all the features available is no longer the standard, while subscriptions and add-ons are now required.

Another clear example of skimpflation is the fracturing of shows, movies, and sports across multiple streaming platforms. Any NFL fan can tell you how difficult it has become this season to watch games and follow a single team. Originally, viewers could only watch games on cable in the region where they lived. If you were a New York Giants fan who moved, it was hard to watch games outside your home market. When the NFL introduced Sunday Ticket, it gave fans a clear solution. You could watch out-of-market games no matter where you lived. That benefit has been diluted as games have been split across more platforms. Now, even with cable, you may also need Amazon Prime, Netflix, and other services to watch every game in a season. A diehard fan who wants to follow one team can end up paying for multiple subscriptions just to avoid missing games. This fragmentation raises costs for consumers simply to watch what they used to get in one place. Competition can lower prices and expand options, but NFL games are limited and exclusive rights divide games across platforms. The result is straightforward: Fans pay more, manage more accounts, and still face more costs to watching the same sport.

These shifts across subscription services are another way inflation shows up in daily life, even when the headline price does not change. As demand for convenience, content, and speed has grown, providers have expanded the menu of options. That variety can be useful, but it also sorts consumers by willingness to pay. The standard service increasingly reflects what the average customer will tolerate, while the faster, ad-free, or full-access experience is reserved for those who are willing to pay more. In effect, the market is creating more choice by separating users into tiers, and the upgrade is often framed as a benefit even when it simply preserves what used to be standard.

The phenomenon of skimpflation matters because it changes how households experience the cost of living. A family can feel like it is paying more without seeing a clear price increase, not because the product changed, but because the baseline experience has been redefined. The result is a quiet form of pressure on budgets: more subscriptions, more add-ons, more decisions at checkout, and more small monthly charges that compound into a larger annual cost.

This practice of skimpflation, as it becomes more prevalent in our daily life, also creates a measurement problem. Price level indicators like CPI and PCE are designed to track changes in prices, and they do adjust for many observable changes in products. But when the change is lower quality, a slower standard tier, fewer features included, more content placed behind a premium tier, or more ads inside a plan that used to be ad free, the effective price paid by consumers can rise without an easy recorded price increase. In those cases, inflation can be experienced as a decline in value rather than an increase in sticker price, and the headline measures can understate the inflation pressure households actually feel.

Better monetary and fiscal policy would reduce inflation and, in turn, alleviate shrinkflation and the segmentation it creates. When inflation is restrained and the purchasing power of the dollar is stable, consumers are less sensitive to small changes in monthly costs, and firms face less pressure to defend margins through constant repackaging of the same service into multiple tiers. Moreover, a more sustainable fiscal path that restrains debt growth can support macroeconomic stability, helping anchor inflation expectations and reduce the churn that pushes businesses toward frequent pricing and packaging changes. In a steadier environment with a stronger dollar, competition can focus more on real improvements and less on dividing the same service into standard and premium versions just to keep up with rising costs. That shift can deliver genuine innovation, better service, and a clearer link between what people pay and what they receive, so households feel less burdened by rising costs and more able to build security, opportunity, and wealth.

Joseph R. McCormack, Ph.D.

Dr. Joseph McCormack has more than 15 years of experience as an economist and subject-matter expert, specializing in economic policy analysis, forecasting, financial institutions, and econometric modeling. His expertise spans translating complex research into clear economic storytelling, evaluating fiscal and legislative policy, and leading teams in model validation, predictive analytics, and risk assessment.