There’s a broad perception that the frum world’s pricing increases in recent years have been much more drastic and widespread versus broader society. I’ve dubbed this perceived phenomenon “frumflation.”
Food. Clothing. Babysitters. Housing. Cars. Salaries. Even local cleaning help costs exploded much faster than elsewhere. Why is “frumflation” so much higher than national inflation?
Similarly, economics 101 teaches that as prices rise, supplies tend to rise and demand falls. But frum prices seemed to fall very slowly, if at all. Why does pricing in the frum world sometimes seem to ignore typical microeconomics?
Some Caveats First
A few very important caveats first. These are musings and theories, not verified facts. Also, I’m not discussing rises in standards of living. A lot of the cost pressures we experience are due to us communally ratcheting up the quantity and quality of purchases, not price rises of the same stuff. And I’m not criticizing or pointing fingers at anyone here. Most people and businesses are doing their best to survive in a system they have little control over. Finally, some of the following thoughts bump directly into halachic and hashkafic issues. Ask your LOR before concluding anything that falls into those categories.
Amplified Price Signals on the Way Up
Prices spiral much more quickly when information flows speedily. In our tight-knit world, word often gets around in a flash. Ten minutes after one store or service provider raises prices, 15 siblings/ siblings-in-law, 50 cousins, and 300 chat group cheerleader friends encourage them to follow “the market” and raise prices. I exaggerate a bit here, but the kernel is probably accurate.
Muted Downward Price Signals
But frum pricing information does not flow as rapidly in reverse. Klal Yisrael is, correctly, extremely hesitant to harm someone’s parnassah by publicizing that certain products or services are overpriced. There’s also a halachah not to tell people they overpaid on a done deal. It may be logically and even halachically inconsistent, but frum-world price information zips around quickly on the way up yet trickles very slowly on the way down. So there’s much more upward price pressure than downward pressure.
Why Doesn’t the Market Adjust to High Prices?
These unusual information-flow patterns may be a factor in the velocity of frumflation, but they definitely can’t explain all of it. Typically, at some point, high prices suppress demand and increase supply. Why doesn’t frumflation eventually lead consumers to lower demand and encourage producers to increase supply significantly, eventually pushing prices lower?
Demand Indifference
On the demand side, the frum world seems to exhibit a lot more price indifference; that is, spending without close regard to pricing shifts. From a chessed perspective, we may grit our teeth a bit, but we very much want to support frum stores and service providers even in the face of higher prices. Beyond frumkeit, the heimish world has a high percentage of high-earning families that may not like paying more for food, clothes, babysitting, and cleaning help, but they aren’t going to cut back on their day-to-day basics either.
Rich and Poor
On the opposite side of the spectrum, a good slice of frum families has most of their food, housing, health care, and daycare covered by Uncle Sam. Some are also getting significant communal help or family assistance for tuition, clothing, simchos, therapy, camp, and/or other needs they couldn’t otherwise afford. While it’s vital and beautiful that struggling people get financial help, they may be more likely to become price indifferent. If WIC, CHS, or a gvir is footing the bills, the consumer often doesn’t care about costs. This means that demand can stay rock-solid even though prices spiral. Of course, being wealthy or poor isn’t a frum thing, but I think we have a higher percentage when both those segments are combined.
Oligopolistic Markets
On the supply side, we may have some oligopolistic behavior, keeping prices higher than in a fully competitive market. An oligopoly is a market dominated by a few firms that realize they are interdependent in their pricing and output policies. The number of firms is small enough to give each firm some market power. They’d rather keep prices high than compete against each other in a losing battle for lower profit margins. In some frum industries, a small number of players control huge chunks of the market. This is usually not good for price competitiveness.
Blue Collar Labor Shortages
Some of the supply shortages may not be easily corrected because many of us simply don’t want to do certain kinds of work. After years of guiding and incentivizing yungeleit, directly and indirectly, to become accountants, Amazon business owners, or real estate flippers, and young ladies and girls to become therapists, programmers, or marketing entrepreneurs, we shouldn’t be shocked when we have severe shortages of plumbers, bus drivers, teachers, school administrators, and office managers. I’m not saying our career-selection approach is wrong, but there are ramifications to encouraging certain kinds of work over others.
Tight Trust-Based Circles
A lack of trusted vendors circles back to our original point of how information travels in our tight knit community. More so than most, we tend to stick to service providers others recommend and are reluctant to try new vendors. This gives tremendous pricing power to any vendor or store with an established reputation that often sets prices far higher than what would otherwise be the norm.
Ein Breirah
I suspect that overarching all of this is an element of ein breirah. Frum life is costly, so we spend, regardless of price or affordability. “Hashem will figure it out for us in some way. Everyone figures it out somehow, and so will we,” is a common refrain. Similarly, when things are tight, we might say, “I must jack up my rates so I can pay my bills. Everyone else is raising prices on me, so ein breirah.” And there is some truth to these perspectives. This equals added price indifference to both consumers and suppliers.
Realistic Competition
There’s no question that the “frum price” is now sometimes much higher than the general market price. When it comes to some products, it is often impossible for local frum businesses to compete on an even footing with international behemoths who enjoy unfathomable economies of scale. We need to be realistic in our expectations of much smaller heimish manufacturers and retailers.
Heimish Means Higher?
That being said, sometimes frum prices seem far higher for no discernible reason… just because. Because frum customers want to buy local, support local, and trust local. Even if this means paying more.
But the opposite side of that communal courtesy coin is that those selling services and products to the community should try to keep prices as low as reasonably possible! This used to be the case, and the “frum price” was often lower, but not anymore. And at this point, many frum consumers are saying ein breirah in the other direction… we can’t pay far higher frum prices and need to look elsewhere.
Want to dig deeper?
Try these related articles
The Impossibility of a Frum Family’s Finances