As grown-ups navigating the world of finances, we're all finding ways to save some money. Whether it's comparing prices online, delving into DIY solutions, or just opting for store brands over popular ones, saving a few dollars is like an art form in people’s daily lives.
And who can forget the joy of finding a good deal, only to realize later that the product was a downsized version of what you normally purchase? That's shrinkflation at its best. The term is a combination of two words: shrink and inflation. The "shrink" refers to the change or reduction in the product size, while the "-flation" part comes from inflation—the increase in prices.
It’s more likely that customers will notice the increase in cost; that’s why companies opt to reduce the size of the product while maintaining its sticker price. Simply put, shrinkflation is a form of hidden inflation. Businesses make profit as people pay more for a package containing a little bit less.
For instance, Toblerone cleverly reduced the weight of its chocolate bars in 2016. They increased the gap between the popular triangular peak design, leading to a noticeable decrease in the amount of chocolate per bar.
To deal with shrinkflation, many politicians and corporations have started adopting different measures. In June 2023, French Finance Minister Bruno Le Maire called 75 retailers and consumer groups for a meeting to discuss pricing concerns, challenging large corporations in the process.
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Carrefour, the second-largest grocery retailer in France, put warning stickers on certain items on the shelves reading: "This product has seen its volume/weight fall and the effective price charged by the supplier rise." Their intention was to let the consumer know what was really happening.
They identified 26 products, including Nestle, PepsiCo and Unilever, that have become smaller in size without a change in price. Stefen Bompais, director of client communications at Carrefour, told the BBC, "Obviously, the aim in stigmatizing these products is to be able to tell manufacturers to rethink their pricing policy.
In other countries like the UK, the British consumer groups also warned people of the effects of shrinkflation on common items like cat food and chocolate biscuits, among others.
In the United States, the White House stated that “President Biden is calling on companies to put a stop to shrinkflation.” In fact, the president has called for a bill allowing the Federal Trade Commission to make rules to stop shrinkflation. The bill will also let the FTC and state attorneys sue companies for the same.
On the other hand, many companies have explained why prices are going up and products are getting smaller. Talking about Pringles, a Kellogg's spokesperson told Which publication, “As the cost of ingredients and production processes increase, it can cost us more to make our products than it used to. That said, prices don’t always increase, for example in 2021 a 200g can RRP was £2.50 and in 2022 it was £2.”
