How inflation takes a bite out of your Domino’s carryout

Inflation is running at its fastest rate, year over year, since June 1982. Generally, people see this in the form of rising prices. But that is only part of the story, as the sad tale of the Domino’s carryout deal illustrates.

Fox 9 reports:

Domino’s recently announced changes to one of its popular menu options. While the chain is known primarily for pizza, it also offers a variety of chicken wing options to its customers.

According to a recent announcement, however, customers are going to start getting less wings.

At the 2022 ICR Conference, Domino’s CEO Ritch Allison explained that several changes will be coming to the Domino’s menu, Nation’s Restaurant News reports. He stated that the chain’s $7.99 carryout deal will now only include eight wings.

Allison explained that commodity costs and inflation are responsible for the reduction in wings. The move is reportedly being made in anticipation of increases in both the cost of food and wages.

So, since your carryout will still cost $7.99, that means no inflation, right?

Wrong. Previously, you were getting 10 wings in your carryout for $7.99 which worked out at 80 cents per wing. Now, when you are only getting eight wings in your carryout for the same nominal price, you are paying $1.00 per wing: that is a hefty price increase of 25 percent per wing.

What this shows is that inflation does not simply manifest itself in paying a higher nominal amount for the same quantity of stuff, but can also manifest in paying the same nominal amount for a smaller quantity of stuff. Even worse, in this situation it isn’t clear that official figures do a great job of picking up this type of inflation.

Either way, this is yet another illustration of the key point: for economic welfare, it is the real that matters, not the nominal.