“It didn’t taste the way it used to, and the price made my eyes pop.”

A friend recently shared this lament about stopping by his neighborhood Dairy Queen for a banana split. He had looked forward to the visit because, when he was a kid, a banana split was the ultimate summer treat — a big glass boat filled with vanilla, chocolate and strawberry ice‑cream scoops, a fresh banana, fruity syrups, whipped cream and the obligatory cherries on top. It was indulgent but inexpensive, just a quarter at the lunch counter or ice‑cream parlor. In 1950s Woolworth’s stores, a regular banana split cost 25 cents and some parlors sold the same treat for 10 cents in 1904. Even in 1963, a banana split at Farrell’s Ice Cream Parlour cost 75 cents and did not cross the $2 mark until 1979.

Fast‑forward to today. My friend paid nearly eight dollars for a banana split — and the quality, in his words, felt like a “poor imitation” of his childhood memory. Menu prices published in April 2024 and July 2025 show that a regular banana split at Dairy Queen is around $4.99 or $4.29, so an $8 version may include extra toppings or local mark‑ups. Regardless, the jump from a quarter to five or eight dollars illustrates something broader than just a dessert: inflation has quietly eroded the purchasing power of our dollars.

What Happened to That 25‑Cent Banana Split?

When my friend was a child, spending twenty‑five cents on a treat felt like pocket change. That price must be viewed through the lens of inflation. Prices in the U.S. have risen considerably over the past 60–70 years. According to data from the U.S. Bureau of Labor Statistics, the average price of a half gallon of prepackaged ice cream reached $6.49 in June 2025 fred.stlouisfed.org. That figure was about $4.91 in 2014 boomerretirementbriefs.com and roughly $1.89 in 1980, showing a steep climb in just a few decades. Inflation doesn’t just raise prices; it changes our reference point. A quarter in 1950 bought a banana split; today it hardly buys one banana.

The quality of goods can suffer as well. Economists call this trend “skimpflation,” where producers quietly reduce quality or ingredients while maintaining or raising prices. A 2025 shrinkflation report found that 75% of Americans noticed shrinkflation (package or portion size reductions) and 72% saw it in food products. The same report notes examples of skimpflation: in 2023 a national dessert brand reduced the milk‑fat content of its ice cream below the legal 10% threshold and began labeling the product as a “frozen dairy dessert”. These changes help keep costs down for producers when ingredient prices — milk, sugar, cocoa, peanuts — are rising, but they leave consumers feeling that something is missing.

Understanding Money Illusion

When we compare a 25‑cent banana split to one that costs almost eight dollars, we experience money illusion — the tendency to think in nominal prices rather than inflation‑adjusted values. While eight dollars today is far more than a quarter, it is not an apples‑to‑apples comparison. Adjusted for general price inflation, a 25‑cent treat in 1953 would be worth roughly $2.50–$3.00 today, depending on the inflation metric used. That means part of the price increase reflects overall inflation, and part reflects other factors: higher labor costs, improved food safety standards, rent, marketing expenses, and corporate margins.

It’s also worth noting that Banana Splits were once considered premium sundaes. The first banana split in 1904 cost 10 cents, twice as much as other sundaes. As ice‑cream parlors and chains proliferated, banana splits became an indulgent but accessible treat. Today’s $5‑$8 price still includes at least three scoops of ice cream, fresh fruit and toppings. However, the total cost relative to average wages has changed. A child mowing lawns in 1955 could earn $1 an hour; a banana split was 25 cents, or 15 minutes of work. In 2025, U.S. teens often earn $9–$15 an hour; an $8 banana split can still require 30–40 minutes of work after taxes.

The Broader Economy: Inflation, Shrinkflation and Investing

The banana split story offers a microcosm of how inflation affects our daily lives. In 2024 and 2025, U.S. inflation cooled from its 2022 highs but remained above the Federal Reserve’s 2% target. Price pressures remain elevated in categories like food, housing and services. Some of the pressure comes from shrinkflation, where companies reduce the size of packages but keep the price the same. Research in 2025 found shrinkflation averaged 16.2% among selected national grocery brands. Consumers notice — three‑quarters of U.S. shoppers are aware of shrinkflation and many switch brands in response.

Lessons from a Banana Split

Prices change, memories linger. Nostalgia can distort our perception of value. Remembering that a banana split once cost 25 cents doesn’t make today’s $5–$8 price a rip‑off when adjusted for decades of inflation and higher wages.
Quality matters. Skimpflation means paying more for less. Read ingredient labels and support businesses that maintain quality standards. If your favorite brand disappoints, let the company know or explore local alternatives.
Invest with purchasing power in mind. Inflation doesn’t only affect treats. It determines whether your retirement savings will maintain your lifestyle. Monitor inflation data — for example, the Bureau of Labor Statistics reports that the average price of a half gallon of ice cream was $6.49 in June 2025 fred.stlouisfed.org — and adjust your investment strategy accordingly.
Expect continued volatility. The Federal Reserve’s goal of returning inflation to 2% may take a long time. Supply‑chain disruptions, labor shortages and geopolitical events can keep prices elevated. Stay disciplined with budgeting and investing rather than reacting emotionally to each price increase.