Retailers are using a simple mind trick on you to make their discounts seem bigger than they are

• Inflation is holding steady at 3.7% despite the Fed's hopes of getting back down to 2.0%.
• This has retailers using an old trick to hide the true value of discounts from consumers, Walmart's ex-CEO says.
• Percentage discounts don't tell you much if you don't know the original price.

Inflation is back on the rise and it's forcing retailers to get creative.

The latest Consumer Price Index data was released on Thursday, showing that inflation held steady in September, with prices 3.7% greater than the same period in 2022. That was the same rate as August after a dip in July to 3.2%.

This means prices are still rising faster than the Fed's goal of getting inflation back down to 2.0%. Even though shoppers are hurting, it's not always obvious how exactly the crunch is hitting your wallets.

One way might be in products marked as discounted. In a recent interview with CNBC, ex-Walmart CEO and current Hanes and Darden restaurants board member Bill Simon laid out the simple sign to show buyers how to spot when discounts consumers have come to expect are not as significant now as they might appear.

"If you look at Amazon's and Walmart's websites, there's a lot of interesting things going on," Simon told "Fast Money." "They usually say, '50-inch TV, $199,' or something like that. And now they say, '50-inch TV, 40% off.' And you use percentages when you're not real proud of your price point."

In the data analytics world, there is an old saying that goes, "A big percentage of nothing is still nothing." The same logic applies here as a percentage discount doesn't mean you're getting a good deal if the original price was already greatly inflated.

The Walmart page seen above is a classic example, broadcasting "Deals" and "up to X%" language meant to captivate consumers and make them think they are getting a cheaper product, without actually knowing the base price.

Businesses have also used other tricks to adjust to rising prices without turning customers away. Some online stores use "dark patterns" to push customers to do something they might not otherwise do, such as a countdown clock to urge more impulse purchases. Brands also use "shrinkflation" where they reduce the amount of product while keep the price level.

Shoppers are starting to crack

Simon used this tactic as an example of how consumers are starting to feel more pressure from many angles. While shoppers may fall for the trick at first, they'll eventually realize they are still spending more money, and they'll pull back.

In addition to inflation, Simon noted that the 2024 presidential election, global macroeconomic issues, geopolitical tensions, interest rates, and student loan repayments are examples of current topics that make the consumer "weary" of spending money.

"That sort of pile-up wears on the consumer and makes them weary, even though they may not be as bad as they feel," Simon said. "It's a challenge, but I think overall, for the first time in a long time, there is reason for the consumer to pause."

While spending overall remained strong to start the year, we have seen signs that consumers are changing or planning to change their spending habits and using less money.

People are spending less on cars, big-ticket items at Costco, and even trading down for lower-priced grocery items.

In other words, consumers are still unsure if the US economy will successfully avoid a recession and inflation is taking its toll on your wallets even when it might not seem like it.

You can see the entire CNBC interview here: