Ever noticed how fast gas stations hike their prices when crude oil spikes, but they seem to move in slow motion when the market crashes? It’s frustrating. You’re standing at the pump, looking at the news about a global oil glut, yet the numbers on the spinning display haven't budged an inch. Economists actually have a name for this phenomenon where prices go up and they stay there even after the initial "shock" vanishes. They call it "Rockets and Feathers."
Prices shoot up like rockets. They drift down like feathers. Sometimes, they don't even drift; they just park.
Understanding why this happens isn't just about venting your frustrations at the grocery store checkout. It’s about the messy, human, and often calculated ways that businesses manage their bottom lines in an era of high inflation and supply chain chaos. If you’ve felt like you’re being squeezed even after the "emergency" ended, you aren't imagining things.
The Sticky Truth About Rockets and Feathers
The term "Rockets and Feathers" was popularized by economist Robert Bacon back in 1991. He was looking at UK gasoline prices and found a glaring asymmetry. When costs go up, businesses have a massive incentive to pass that cost to you immediately to protect their margins. If they wait, they lose money every second. But when costs drop? There is no legal or immediate pressure to lower prices.
Why would they?
Honestly, most companies will wait to see if the lower cost is "sticky" or just a temporary blip. If a restaurant owner sees egg prices drop by 20% this week, they aren't going to reprint their menus tomorrow. They’ll wait. They’ll watch. They’ll pocket the difference to make up for the months they got hammered by high costs. This creates a lag. This lag is exactly why prices go up and they stay there for much longer than we think is fair.
It's Not Always Just Greed (But Sometimes It Is)
We hear a lot about "greedflation" lately. It's a buzzy term. But the reality is a mix of psychological barriers and genuine operational costs known as "menu costs."
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Think about a small coffee shop. Changing prices isn't just clicking a button. It involves updating the digital POS system, printing new boards, and—most importantly—dealing with the social friction of explaining it to customers. Because humans hate price changes, businesses try to do them as rarely as possible. When they finally do raise them, they usually raise them enough to cover current and anticipated future costs.
Then there’s the psychological side. If you’re used to paying $5 for a latte, and the price jumps to $6 due to a milk shortage, you’ll grumble. But after six months, $6 becomes your new "normal." Once the market accepts a price point, the business has very little reason to bring it back down unless a competitor forces their hand.
The Role of Market Concentration
In a perfect world—the kind you find in introductory economics textbooks—competition would force those prices down. If Shop A doesn't lower prices, Shop B will, and everyone will go to Shop B.
But we don't live in a textbook.
In many industries, from meatpacking to broadband internet, a few massive players dominate. When there are only three or four major companies, they don't need to engage in a "race to the bottom" on pricing. They just watch each other. If everyone keeps their prices high, everyone wins—except you. This lack of aggressive competition is a primary reason why once prices go up and they stay there, they rarely see the basement again.
Supply Chain Scars and the "Just-in-Case" Premium
The 2020s changed how CEOs think. For decades, the goal was "Just-in-Time" manufacturing—keeping as little inventory as possible to save money. Then the world broke. Ships were stuck, factories closed, and suddenly "Just-in-Time" became "Out-of-Stock."
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Now, companies are building "Just-in-Case" buffers.
This means holding more inventory, diversifying suppliers, and moving manufacturing closer to home. All of that is incredibly expensive. When you ask why prices go up and they stay there, part of the answer is that companies are now baking a "risk premium" into everything you buy. They are charging you more today to ensure they don't run out of stuff tomorrow.
Real World Evidence: From Eggs to Used Cars
Look at the Great Egg Spike of 2022-2023. Avian flu wiped out millions of birds. Wholesale prices quintupled. Retail prices followed instantly. When the bird population recovered and wholesale prices plummeted, did your carton of Grade A large eggs go back to 2019 prices? Not exactly. They settled at a "new normal" that was significantly higher than the pre-crisis baseline.
Used cars tell a similar story. The chip shortage sent prices into the stratosphere. While they have cooled off significantly from their peak, the floor has shifted. You can't find a reliable "beater" for $2,000 anymore. That price floor has moved up because the costs of parts, labor, and logistics have established a new plateau.
How to Navigate a World Where Prices Stay Put
If the "feathers" are never coming down, you have to change how you consume. It sounds basic, but in a world of asymmetric pricing, loyalty is a tax.
Companies rely on "search costs"—the idea that you are too busy or tired to find a better deal. They know that once they've gotten you to accept a higher price, you'll probably keep paying it out of habit.
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Strategies for the New Plateau
- Audit your recurring "price creeps." Insurance premiums and software subscriptions are notorious for this. They go up and they stay there because they bet on your inertia. Call them. Switch. Every 12 months, move your loyalty to the highest bidder.
- Buy the "Laggards." Not all goods follow the rocket-and-feather pattern at the same speed. Generic or store-brand items often have a longer delay before they hike prices compared to name brands, though they also take longer to drop.
- Understand the "Reference Price." Retailers use high "original" prices to make "sale" prices look good. If a price went up and stayed there, it might now be used as a fake anchor for a perpetual 20% off sale. Don't look at the discount; look at the final number.
The economic reality is that deflation—prices actually going down across the board—is something the Federal Reserve and central banks actually try to avoid. It can lead to economic stagnation. So, while we wait for the "feathers" to drift down, the goal of the system is usually just to stop the "rockets" from firing again.
Moving Forward
Stop waiting for 2019 prices to return. They aren't coming back. The most effective way to handle a reality where prices go up and they stay there is to focus on your own "output" value. If the cost of the world has shifted 20% higher, your focus must be on shifting your income or your efficiency to match that new baseline.
Keep an eye on wholesale commodity trends via sites like the Bureau of Labor Statistics (BLS) to know when you're being genuinely gouged versus when a business is just surviving. When you see wholesale costs drop but retail prices remain pegged to the ceiling, that is your signal to stop being a loyal customer and start being a deal hunter.
The "New Normal" is only permanent if we keep paying for it without question.
Actionable Next Steps:
Identify three recurring monthly expenses—like your internet bill, car insurance, or a streaming bundle—and check their price history over the last two years. If they have climbed and remained stagnant despite market cooling, spend 30 minutes today calling those providers to request a "retention discount" or scouting a competitor's introductory rate. Move your money where the feathers actually land.