2016 Toblerone bar from the United Kingdom with larger gaps between peaks, using 10% less chocolate[1]
Kellogg's shortened and shrank the diameter of the standard tube ofPringles in Australia through the 2010s and 2020s, as they shifted production from the United States to Malaysia. The net weight of each tube was reduced from 165g to 134g, the size of each Pringle was also reduced, and consumers also noticed a blander taste. These changes also coincided with price increases.[2][3]
Ineconomics,shrinkflation, also known aspackage downsizing,weight-out,[4] andprice pack architecture[5] is the process of available products shrinking in size or quantity while the prices remain the same.[6][7] The word is aportmanteau of the wordsshrink andinflation and was coined as the counterpart toeconomic inflation, wherein prices rise while the product remains unchanged. A related term,skimpflation, involves a reformulation or other reduction in quality.[8]
Shrinkflation allows manufacturers and retailers to manage rising production costs while maintaining sales volume,operating margin, and profitability, and is often used as an alternative to raising prices in line with inflation.[9][7]Consumer protection groups are critical of the practice.
A parallel to shrinkflation iscurrency debasement. This graph shows decline in coin silver content over the history of theRoman Empire.
Shrinkflation is a rise in the generalprice level of goods per unit of weight or volume, brought about by a reduction in the weight or size of the item sold.[10] The price for one piece of the packaged product remains the same. This sometimes does not affectinflation measures such as theconsumer price index orRetail Price Index, i.e. it might not increase in the cost of a basket of retail goods and services,[citation needed] but many indicators of price levels and thus inflation are linked to units of volume or weight of products, so that shrinkflation also affects the statistically represented inflation figures.
The first use of the termshrinkflation with its current meaning has been attributed to the economistPippa Malmgren, though the same term had been used earlier by historian Brian Domitrovic to refer to an economy shrinking while also suffering high inflation.[11]
Barak Orbach, an academic economist, argues that competition typically drives shrinkflation: "When supply shocks or other factors inflate production costs, businesses must pass on cost increases to maintain profitability. However, in competitive markets, direct price increases are risky. Under such conditions, businesses often choose to raise prices indirectly through downsizing."[12][unreliable source?]
Without explicitly using the termshrinkflation, macroeconomist Vivek Moorthy much earlier documented and analysed the shrinkage effect of inflation, explaining it by Arthur Okun's "invisible handshake" approach: "Prices are ... based on notions of trust and fairness. it is considered acceptable for firms to respond to cost increases, but not to demand increases. Firms selling a branded product will make deliberate efforts to continue selling at the same price thereby retaining loyal customers. Hence, to cope with inflation, fast moving consumer goods firms would often resort to shrinking the product size to avoid raising prices."[13]
Many grocery stores provideunit price information for all products. In this Norwegian grocery store, the price for a bottle of ketchup is displayed in terms of the price paid per package (64.90kr) as well as the price paid per kilogram (111.90 kr). This allows customers to see how much they will pay and to quickly compare products that have different sizes of packages.
Consumer advocates are critical of shrinkflation because it has the effect of reducing product value by "stealth".[14] The reduction in pack size is sufficiently small as not to be immediately obvious to regular consumers.[15] An unchanged price means that most consumers will not immediately notice the higherunit price, which adversely affects consumers' ability to make informed buying choices. Consumers have been found to be deterred more by rises in prices than by reductions in pack sizes, and some customers would rather have a smaller package at the old price than the old package size at a higher price.[8]
Suppliers and retailers have been called upon to be upfront with customers. According to Ratula Chakraborty, a professor ofbusiness management, they should be legally obliged to notify shoppers when pack sizes have been reduced.[16] In 2023 the French grocery chainCarrefour has started to warn their customers about these practises.[17][18]
Corporate bodies deflect attention from product shrinkage with "less is more" messaging, for example by claiming health benefits of smaller portions or environmental benefits of less packaging.[19][unreliable source?]
Shrinkflation is not the only cause of reduced package sizes. In some cases, such asjunk food, some customers do prefer smaller package sizes.[8]
In other cases, the change is part of a trend to adjust package sizes. In 2003,Danone shrank itsyogurt containers from 8 ounces to 6 ounces, because consumers thought their larger product was too expensive overall; many, though not all, of the grocery stores selling it maintained the old price for the smaller product.[20] Most yogurt manufacturers followed suit, resulting in smaller packages.[8][20]
Inexperimental psychology, ajust-noticeable difference is the amount something must be changed for a difference to be noticeable.[21] Discovered byErnst Heinrich Weber, theJND is a fixed proportion of the reference sensory level, and so the ratio of the JND/reference is roughly constant:where is the original intensity of the particular stimulation, is the addition to it required for the change to be perceived, andk is a constant. Weber's law has important applications inmarketing. Manufacturers and marketers endeavor to determine the relevant JND for their products for two very different reasons:
Negative changes (e.g. reductions in product size or quality, or increase in product price) are not discernible to the public (i.e. remain below JND) and
Product improvements (e.g. improved or updated packaging, larger size or lower price) are very apparent to consumers without being wastefully extravagant (i.e. they are at or just above the JND).
When it comes to product improvements, marketers very much want to meet or exceed the consumer's differential threshold; that is, they want consumers to readily perceive any improvements made in the original products. Marketers use the JND to determine the amount of improvement they should make in their products. Less than the JND is wasted effort because the improvement will not be perceived; more than the JND is again wasteful because it reduces the level of repeat sales. On the other hand, when it comes to price increases, less than the JND is desirable because consumers are unlikely to notice it.
The UKOffice for National Statistics wrote in 2019, "We identified 206 products that shrank in size and 79 that increased in size between September 2015 and June 2017. There was no trend in the frequency of size changes over this period, which included the EU referendum. The majority of products experiencing size changes were food products and in 2016, we estimated that between 1% and 2.1% of food products in our sample shrank in size, while between 0.3% and 0.7% got bigger. We also observed that prices tended not to change when products changed size, consistent with the idea that some products are undergoing 'shrinkflation'."[22]
Impact of Shrinkflation on CPIH in the UK, with the number of food price quotes that saw a change in package size per month
In the United States, theBureau of Labor Statistics has written that "the impact of product downsizing at the all commodity and services level is minimal, with an average annual effect of 0.01 percent per year, so while consumers may notice shrinkflation at the grocery store, it has a very small impact the overall inflation picture they face."[23]
Coffee sold in 1 lb (453.6 g) bags shrank to 400 g or smaller in the 1980s.[8]
In India in 2008, Procter and Gamble reduced the pack size of its detergent Tide from 1 kg to 850 g while maintaining the same price. Similarly around 2012, Orbit reduced the chewing gum pack size from 6 to 5 units, keeping the price at ₹5. In 2013 the staple breakfast item idli was shrunk from 100 g to 75 g, as reported in the Bangalore Mirror.[24]
In January 2009,Häagen-Dazs announced that it would be reducing the size of their ice cream cartons in the US from 16 US fl oz (470 ml) to 14 US fl oz (410 ml).[25][26]
Cadbury'sCrunchie were sold in packs of three instead of four.[27]
In 2015,Cadbury Fingers removed two fingers from each pack, reducing the weight of a pack from 125 grams to 111 grams.[28]
In July 2015, a tub ofCadbury Roses which weighed 975 g in 2011, was reduced to under 730 g, while a tub of CadburyHeroes was reduced to 695 g. However the price remained the same at around £9.[29]
Around 2015,Kellogg's shortened and shrank the diameter of the standard tube ofPringles in Australia and New Zealand, as they shifted production from the United States to Malaysia. The net weight of each tube was reduced from 165g to 134g, the size of each Pringle was also reduced, and consumers also noticed a blander taste. These changes also coincided with price increases.[2][3]
In 2016,Terry's Chocolate Orange was reduced from 175 g to 157 g by changing the moulded shape of each segment to leave an air gap between each piece.[30]
In 2017, Milka Alpine Milk and Milka Nuts & Raisins got reduced from 300 g to 270 g while Triolade got reduced from 300 g to 280 g, all without changing the bag size.[31]
In 2017,McVities reduced the number of Jaffa Cakes in every standard packet from 12 to 10, raising the cost per cake from 9.58 p to 9.9 p.[32]
In 2020,Unilever reduced the size ofBen & Jerry's ice-cream tubs in Europe, going from 500 ml to 465 ml, whilst still retaining theRRP of around 5 euros. Despite this, Unilever has publicly criticized rival ice-cream brands for shrinkflation in the United States, where Ben & Jerry's ice-cream is still sold inpint-sized (473 ml) tubs.[25][26]
In 2021,General Mills shrank their family-sized boxes of cereal down from 19.3 ounces to 18.1 ounces. That means the unit cost per ounce of the product has increased, but for the consumer, the average price in the United States remained $2.99.[33]
In 2022,Procter & Gamble reduced the number of double-ply sheets per roll oftoilet paper from 264 to 244 sheets in the 18-count mega package. This amounts to approximately a roll and a half in the 18-count package.[34]
In 2022, Unilever reduced the size ofDove soap bars from 100 g to 90 g, with most retailers either maintaining the same price or increasing prices.[35]
In 2023,Mars, Incorporated reduced the weight of their Whiskas cat food by 15%, reducing the weight of each pouch from 100 g to 85 g. The price of the packs did not change. This was applicable to their 12×100 g, 40×100 g, 80×100 g, and individual products for both the "in jelly" and "in gravy" products.[36]
In 2024, a bill was introduced in the U.S. Senate which would ban shrinkflation.[37] A separate bill, introduced in the U.S. House of Representatives, would require brands to label products that contain less product than before at the same price.
In October 2021,NPR'sGreg Rosalsky fromPlanet Money proposed the termskimpflation to refer to a degradation in the quality of services while keeping the price constant, such as ahotel offering a more meagerbreakfast or reducing the frequency ofhousekeeping.[38] In 2023,Guardian Money described a number of ingredient changes in British supermarket foods – such as a brand of mayonnaise changing from 9% egg yolk to 6% egg and 1.5% egg yolk – as an example of skimpflation.[39]
Unlike changes to the size and weight of a product, skimpflation is more difficult to measure in a standardized way, and consequently goes unrecorded in measurements of inflation.[8]
Conversely, in September 2022, Izabella Kaminska'sThe Blind Spot published an article that proposed the termshitflation in reference to maintaining a product's price while decreasing quality.[40][unreliable source?] The article's author, Dario Garcia Giner, proposed that shrinkflation and shitflation spoke to theGrossman-Stiglitz paradox, and argued they were akin to "Trojan horses buried in the heart of mainstream finance — just waiting to tear down the system by discombobulating relative values in the big-data spreadsheets that central bankers and financiers depend on to manage economic allocation."
The term has been used by PresidentJoe Biden in 2023 and 2024 to blame companies for deploying this tactic to increase their profits, deflecting criticism about inflation duringhis administration and instead pinning the blame on big business.[41] Biden's claim has been criticized, with someconservatives arguing that hiseconomic policies and theInflation Reduction Act were the primary cause of price increases and shrinking products.[42][43]
Grundpreisverordnung [de] - German law to specify prices per 1 kilogram, 1 litre, 1 cubic metre, 1 metre or 1 square metre for easier comparison - part of PAngV
^ab"Beyond Inflation Numbers: Shrinkflation & Skimpflation".stlouisfed.org.Archived from the original on 2024-12-07. Retrieved2024-11-24.Businesses know that for some goods and services, consumers are more sensitive to changes in price than to changes in quantity, and this tendency often allows businesses to benefit from shrinkflation.
^abcdefSmialek, Jeanna (2024-03-01)."Shrinkflation 101: The Economics of Smaller Groceries".The New York Times.Archived from the original on 2024-03-08. Retrieved2024-03-08.While 'shrinkflation' gets measured, 'skimpflation' does not. Shrinking itself is captured in official inflation data, but another sneaky force that costs consumers is getting missed in the statistics. Companies sometimes use cheaper materials to save on costs in a practice some call "skimpflation." That is much harder for the government to measure.
^McNair, Kari (2023-02-02)."Getting less for the same price? Explore how the CPI measures "shrinkflation" and its impact on inflation".Bureau of Labor Statistics.Archived from the original on 2024-11-09. Retrieved2024-11-24.As input costs increase and costs to create a product rise, companies can increase the list price of a good or they can offer a smaller amount of the product for the same price. So, a candy bar's size might change from 1.6 ounces to 1.5 ounces, yet the price stays the same. In other words, the price per unit the consumer pays increases as the amount they purchase decreases, while the price they pay at the register remains the same. Downsizing is common across food and household commodities, including potato chips, paper towels, cereal, cleaning supplies, and candy. Manufacturers change sizes because market research indicates that consumers are more sensitive to price change than size change.
^Moorthy, Vivek (2017).Applied Macroeconomics Employment, Growth and Inflation (Ist ed.). Delhi: I.K. International Publishing House Pvt.Ltd. pp. Section 3.5 The Rationale for cost based price pp 78.
^Sewraz, Reena (2017-02-21)."Shrinkflation: the food and drink items that have shrunk but aren't any cheaper".lovemoney.com. London, UK.Archived from the original on 2023-04-05. Retrieved2020-07-07.Ratula Chakraborty, senior lecturer in business management at the University of East Anglia, said: "Shrinkflation is a sneaky practice because consumers are not expecting any size changes so do not inspect package sizes unless there is a really noticeable difference."
^"Biden planning to hit food 'shrinkflation,' corporate greed in SOTU".POLITICO. 2024-02-23.Archived from the original on 2024-12-02. Retrieved2024-11-26.Republicans are highly critical of those White House claims, arguing it's Biden's policies that are fueling inflation, not corporations jacking up prices. And even some Democratic economists remain skeptical about how much of the price increases can be pinned on so-called "greedflation."
_Heinz_ketchup_NORWAY_2023-08-31_(cropped).jpg)
_(cropped).jpg)
_2012_-_2017.png)