The Business Guinea Pigs – Volume 5: Everything Costs More!

Mr. Grey puts it like this: Inflation is when lots of prices go up over a longer period of time. The money doesn’t get smaller. It buys less. Daria already nailed it earlier: Not one thing by a lot. Lots of things by a little. Filip’s photos show exactly that: a scoop of ice cream costs €1.70 instead of €1.60, a bread roll 47 cents instead of 45, a bus ticket €1.95 instead of €1.90.

No. Hay has gotten more expensive because the summer was dry and less of it grew. Next year it may get cheaper again. That’s a single price increase. Mojito just says: Not inflation. That’s expensive hay. Daria writes down the book’s key sentence: One expensive carrot is not inflation yet. And Christian adds: A whole expensive shopping basket is more like it.

Purchasing power is how much you get for your money. Last summer, Toffy’s two euros bought two bunches of carrots. Now one bunch costs €1.10, the two euros are only enough for one, and 90 cents are left over. Mr. Grey’s line: The money doesn’t get smaller. It just buys less. And at the end Toffy realizes: He hasn’t spent a thing, and yet he has less.

Daria and Christian compare a basket with a basket: two bunches of carrots, two cucumbers, a sack of hay, a sack of bedding. Last summer it cost €10.00, then €10.40, and most recently €11.30. For a whole country there’s a big basket with food, rent, clothes, tickets and much more. In Germany, the Federal Statistical Office calculates it, and the number is called the inflation rate. In a small basket, a single price increase looks bad. In the big one, lots of things even each other out.

With Christian’s four rules: the same item, the same amount, the same store, with a date. If one is missing, it isn’t a comparison, it’s a memory. Filip adds one more question: How do we know that was the normal price and not a sale? His photos of Knut’s chalkboard, taken three weeks apart, are the proof.

Because everything that goes into them is getting more expensive, says Knut: hay from the farmer, electricity for the greenhouse, gas for the delivery van. With hay, there’s also the dry summer. There isn’t much hay, and lots of people want it. Few goods and lots of buyers, and the price goes up. Mrs. Müller, the dental technician, knows this from her own work: Sometimes it isn’t the work that has gotten more expensive. Sometimes it’s the materials.

No. Ina runs the numbers for Knut: A price is not just a number. A price is a calculation. A sack of hay used to cost him €4.20, he added an 80-cent markup and sold it for €5.00. Now the sack costs him €5.10. At €5.00 he would lose money on every sack. The new price is €5.90, and the 80-cent markup is still 80 cents. Ina’s line: More expensive does not automatically mean greedier.

A package that looks the same as before but has less inside. Rocky loosely stuffs a big sack with hay and puts SAME PRICE in front of it. The luggage scale shows four kilos instead of five. Filip sums it up: The same price is only the same if the same amount is in it. Knut explains what’s allowed: You can sell smaller sacks, but then it has to say so on them. If the sack looks the same as before even though there’s less inside, it’s fooling people.

The unit price tells you what one kilo costs, Ina explains. It makes big and small packages easy to compare, and at home you’ll find it on flour, rice or juice too. Most of the time, nobody reads it. Christian does the math: €5.90 for five kilos is €1.18 per kilo. Rocky’s sack, €5.00 for four kilos, costs €1.25 per kilo. So the same price is more expensive than the expensive price.