Key insights
- Persistent inflation, highlighted by a 4.2% CPI increase in May, is a significant concern. Geopolitical events, like the Iran war, are driving up energy costs and straining household budgets. The proliferation of terms like 'shrinkflation' and 'skimpflation' reflects public anxiety over the rising cost of living. This sustained inflationary pressure suggests a challenging environment for consumers and potentially for corporate profit margins, which could weigh on equity markets.
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The suffix "flation" is everywhere in the financial world these days, and the number of such words seems to be increasing at an accelerating rate—you might even call it "flation"-flation.
These arise, of course, from "inflation," or the persistent rise in price levels, which has gotten a lot of attention lately as the Iran war pushes up costs for gasoline and just about everything else, straining household budgets. A government report released Wednesday showed that consumer prices rose 4.2% in the 12 months ending in May, marking the highest rate of inflation in three years.
The focus on inflation has spawned a growing multitude of other "flation" words to describe various aspects of the widespread price increases. Linguists call this phenomenon a "libfix," or a suffix that people have chopped loose from its original stem word and liberated in order to stick on to other terms.1 Etymologist Michael Quinion lists "flation" in his online dictionary of affixes, or word parts that are added to other root words.2
The proliferation of "flation" terms in the lexicon is an indication of how much concern the public has about the rising cost of living.
Here are some of the more prominent "flations" we’re hearing about:
When companies reduce the size of their products without changing the price. The Bureau of Labor Statistics, the government agency behind the Consumer Price Index inflation gauge, actually gathers data on shrinkflation.3
Similar to shrinkflation, when companies save money by reducing the quality of a product while keeping the price the same. Both shrinkflation and skimpflation mean customers get less bang for their bucks.4
The phenomenon where you’re asked for tips in more and more places—one Investopedia writer was asked for a tip buying merchandise at a Pearl Jam concert, for example.5
A term used by critics of President Donald Trump’s economic policies to highlight the source of price pressures stemming from tariffs, immigration crackdowns and the Iran war, among other things.
The phenomenon of subscriptions draining personal finances, especially when they go up in price without the knowledge of the subscriber. In one survey in 2022, people underestimated how much they were paying in recurring automatic payments by an average of $133 per month.6
The fact that during the recent bout of inflation, prices for cheaper products have gone up more dramatically than their high-end counterparts. One study found budget-brand coffee prices rose 36.4% between 2020 and 2023 versus 9.7% for luxury brands.
Not to be confused with the above, analysts at Morgan Stanley reportedly used the term this month to describe the rapid increase in computer chip prices because of massive demand from the construction of data centers for AI software. Chipflation is affecting the affordability of electronic devices and even broader inflation, they said, as quoted by Reuters.7
When companies raise prices to increase their profits, while using inflation as an excuse. This practice of businesses attempting to make as much money as possible is also known as "capitalism." When inflation surged after the pandemic, corporate profit margins also rocketed skyward, fuelling accusations of widespread greedflation, although this is debated among economists.8
It’s her, yeah, she’s the problem, it’s her: "Swiftflation" or "Swiftonomics" describes how rabid demand for Taylor Swift tickets during her 2023-2024 Eras tour drove up prices in places where she held concerts. For example, hotel and air-fare prices surged by double-digit percentages in 2023 when the singer came to town, the Singapore Business Times reported.9
The increase in costs for live entertainment. Tickets for movies, theaters, and concerts have risen 30% since before the pandemic, higher than the 28% for the total Consumer Price Index according to the Bureau of Labor Statistics. Can Taylor Swift be blamed for this too?10
Quinion flags this as the oldest "flation" compound, a portmanteau dating back to Britain in 1965: it describes an economy with stagnant growth and suffering from high inflation at the same time, which pretty well described the U.S. in the 1970s. Fears about stagflation arose last year when the job market slowed down at the same time inflation was increasing. Since then, however, the job market has improved so those concerns have diminished.
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