What Is Shrinkflation? The Sneaky Way Manufacturers Are Raising Prices

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July 28, 2021 -- If your family seems to be going through favorite products faster than usual, it doesn’t necessarily mean someone’s enjoying secret snacks. It could be “shrinkflation” at work.

Shrinkflation happens when a manufacturer’s costs to produce an item increase, but they’d rather not raise the price you pay at the store. Because most consumers are price-conscious -- you probably know how much you pay for the things you buy regularly -- the company shrinks the package size instead. You pay the same price for your favorite chocolate bar, breakfast cereal, toilet paper, or ice cream, but you don’t realize you’ve taken home less of it until the carton runs out sooner than expected.

Shrinkflation Isn’t New

Though he prefers the term “downsizing,” lawyer and consumer activist Edgar Dworsky has been tracking the practice for decades at his website Consumer World. He says it often ramps up during periods of inflation.

“Manufacturers have a choice,” he says. “Raise the price of an item or do a sneaky price increase by making packages smaller. You’re paying the same but getting less.”

Dworsky says shrinkflation got its start back in the days of nickel candy machines when chocolate makers needed to raise prices. The vendors balked, since their machines only took nickels. So instead of charging 6 cents, the manufacturers made the bars smaller. Problem solved -- and it’s been happening ever since.

During the pandemic, Dworsky didn’t see an increase in shrinkflation. But the most recent consumer price index showed the highest annual inflation rate since 2008. Now, shrinkflation is on the rise, evident in discreet price hikes for items like trash bags, tortilla chips, candy, cat food, and more.

The shrinkflation community on Reddit has nearly 10,000 members, posting new examples almost daily. Recent ones include air freshener, deodorant, chocolate, and even a prepared salad bought at a big-box store, which shrank a full 5 ounces. “A very noticeable difference, I’m still hungry,” one person said.

Food-Insecure People Hit Hardest

Before the pandemic, food insecurity -- when finances keep you from being able to afford enough food -- was the lowest it had been in 20 years in the U.S., according to Feeding America, which tracks the rate. The organization projects the number of food-insecure Americans will grow from 35 million in 2019 to as many as 42 million this year.

Craig Gundersen, PhD, is a professor in the Department of Agricultural and Consumer Economics at the University of Illinois at Champaign-Urbana. He’s also the lead researcher for Feeding America.

“Poverty rates hardly rose at all during the pandemic, because of the stimulus packages,” he says. “But we should be concerned about inflation, in part because those stimulus packages have driven up consumer demand. That leads to increased prices, which puts more of a burden on the poor.”

Shrinkflation has the potential to hit those people the hardest, says economist Diane Whitmore Schanzenbach, PhD, director of the Institute for Policy Research at Northwestern University.

“Low-income families spend a higher percentage of their money on necessities like food,” she says.

Her research shows food, housing, transportation, health care, and clothing together claim as much as 85% of low-income families’ dollars, while those costs only eat up two-thirds of high-income families’ income.

“When food prices go up, it disproportionately harms poor people on fixed incomes, who don’t have a lot of slack in their budget,” she says.

If a lower-income family finds that their regular grocery purchases -- which used to feed six people -- now only feed five, for instance, either someone goes hungry or they must switch to lower-quality food.

“It wouldn’t shock me at all if this contributes to less healthy eating,” Schanzenbach says.

How to Outsmart Shrinkflation

Just because manufacturers may be selling less for the same price, it doesn’t mean you have to pay it. Here’s what Dworsky recommends you do:

  • Use unit prices. At many grocery stores, labels on the shelves show how much each item costs per unit (weight, volume, area, length, or count). When a company decides to put less in a package but charge the same amount, the price tag won’t change -- but the unit cost will go up. That label also makes it easier for you to compare similar items from different brands. If the unit cost goes up for your favorite sliced bread, for instance, you may find another brand for which it’s stayed the same.
  • Read the fine print. If a package says, “new and improved” or “new look,” check to make sure the amount inside hasn’t shrunk. “It might say ‘40% more,’ but the fine print says that’s compared to the 12-ounce size,” says Dworsky. Occasionally, a manufacturer will make the package appear to be the same size by adding a plastic insert or pushing up the underside so there’s less room for the product.
  • Check nutrition facts. Sometimes, but not always, manufacturers will shrink the size of each portion in a package. “Packaged bagels have gotten smaller,” says Dworsky. “You would have seen 24 ounces a few years ago, then 22, and now six bagels weigh 20 ounces. A portion is still one bagel, but it’s lighter, with fewer calories.”
  • Buy store brands. When major national brands are shrinking their products, house brands are often the last to do so, says Dworsky. “At my Stop & Shop, the big brands of orange juice reduced their containers from 64 to 59 to 52 ounces. The Stop & Shop brand is still 64.”
  • Write to the manufacturer. Your complaint probably won’t convince the company to restore the original package, but it may send you coupons for free items, says Dworsky.
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