Price Creep

Vincent. Old joke. His was the voice on the Thriller Album, the one the legendary one-gloved pedophile made. But...we digress.

Creak. Creaaakkk. Creak. Do you hear that? It’s the sound of prices, creeping slowly, but surely, upward. Maybe it’s movie tickets, or stocks...or God forbid, coffee.

A price creep is when the price of a good or service slowly gets larger and larger...and people are generally cool with it. It’s when we keep paying for the thing, even as its cost rises slowly but surely over time. This is different from inflation, which is when prices (and wages) go up as the economy expands and more money is pumped into the economic system. Price creeps are looking at real costs, not nominal.

Price creep affects us in the real world: our investment portfolios, what we spend our fun money on, and more. It’s interesting, since prices creeping upward kind of goes against most basic economic theory. In theory, people should demand less for a good as its price rises, unless it’s deemed “inelastic.” But usually only goods we really need are inelastic; we’re willing to pay higher prices for them because we feel like we don’t have a choice (think: food, gas to drive to work).

Price creeps be creeping economists out.