New terms for the Turkish economy from Mahfi Eğilmez: What is 'Unrecorded Inflation'?

Economist Mahfi Eğilmez continues to add new terms to the agenda in his articles, and this time he has drawn attention to "Unrecorded inflation". In his previous articles, he had already covered Shrinkflation, Skimpflation, Greedflation, and Optical Illusion. So, what do these terms mean? Here are the details...

WHAT IS SHRINKFLATION?

It refers to the reduction of the quantity of a product while its price remains the same. In other words, the weight or volume is decreased while the price stays constant.

The reason for shrinkflation is to avoid drawing the consumer's attention to rising product prices resulting from increased production costs and high inflation.

WHAT IS SKIMPFLATION?

Skimpflation means that the quality of a product is lowered even though its price remains unchanged. That is, it is observed that the ingredients of a product previously purchased at the same price have changed, the quality of materials has decreased, or the service provided has diminished.

Also defined as a hidden price increase, skimpflation results in the consumer actually receiving less product due to reductions made in dimensions or contents before the product price changes.

WHAT IS GREEDFLATION?

It is formed by the combination of the English words "greed" and "inflation". This term is used when it is believed that inflation in the economy stems from the greed of consumers and businesses.

The reason for the occurrence of greedflation also stems from the consumer's readiness to pay more to meet their demand for goods and services; businesses then raise prices to increase their profit margins.

WHAT IS OPTICAL ILLUSION?

Optical illusion refers to erroneous interpretations made by economic analysts, policymakers, or the public when evaluating the true state of the economy.

When it is said that retail sales in a country have increased by 5 percent compared to the previous year, it might be interpreted as the economy strengthening and consumers spending more. However, if the underlying reasons for this increase are not handled carefully, the result can be misleading.

WHAT IS UNRECORDED INFLATION?

It is a type of inflation that is not included in official inflation measurements or reflected in official statistics.

The reason for the emergence of unrecorded inflation is the official fixing or limiting of certain goods and service prices during price control and regulation; it also occurs because informal economic activities are not reflected in official records, leading to gaps in inflation calculations.

Changes in the monetary policies of central banks or hidden increases in the money supply are also factors in unrecorded inflation.

News Source: 12punto