The Use of Overinflation (Reduflation) by Some Companies in Mexico

• DOI: https://doi.org/10.22533/at.ed.216412402011

• Palavras-chave: Sobreinflación, Reduflación, Inflación.

• Keywords: Sobreinflación, Reduflación, Inflación.

• Abstract:

  Some companies, especially in inflationary times, have used the decrease in the net content of their products as a way to keep prices accessible to consumers. However, even in times of low inflation, companies not only reduce their content, but also increase their prices well above the average price increase, causing overinflation. The present investigation chose thirty popular consumer products in Mexico and compared the decrease in their net content plus the increase in their prices, with the average increase in the INPC. The results show that this policy, rather than supporting consumers, has allowed companies, deceptively, to raise their prices (and therefore their profits) by applying this policy. It is suggested that the authority regulate this practice, and that, in addition, the INEGI considers this phenomenon when calculating the increase in prices in Mexico.