Shrinkflation: The Economics of Package Downsizing

In recent years, shrinkflation has become a more common phenomenon as businesses attempt to offset rising costs by reducing the size of their products. Sometimes this means that you get less for your money, as is the case with many food items that have shrunk in size over the past few years. So what is shrinkflation, and why is it happening? Read on to find out!

Photo by Charles Gao on Unsplash

What is shrinkflation and how does it work?

Shrinkflation is an economic phenomenon in which a product's price stays the same while its size decreases. This shrinkage can be seen in many different products, from groceries to toys and even houses! The average weight of snack foods has been shrinking over time due to shrinkflation happening all around us - but why?

When prices go up, companies can't always just raise their prices to match because that would mean they'd lose customers. So instead, they shrink the size of their products and keep the same price. This way, they save money on things like ingredients, production costs, and even shipping!

How does shrinkflation impact consumers?

Shrinkflation doesn't just affect businesses - it impacts all of us as consumers. For one thing, shrinkflation makes it harder for us to track how much value we're getting for our money. Furthermore, it results in unreported price increases. This is because inflation indexes take into account the average price levels, but they do not consider minor changes in product sizes. The indexes are designed to maintain the basket of goods constant.

Examples of shrinkflation in the real world

Snack foods like potato chips, chocolate bars, and cookies have all been shrinking over time due to shrinkflation happening all around us! The average weight of these foods has decreased by as much as 20% since the 1990s. Another example is notebooks. The page count on a notebook is reduced from 1000 to 800, yet the price stays unchanged.

Take a look at this bar of chocolate. Do you see how our chocolate bars are "shrinking"? The second chocolate has less quantity than the first.

The future of shrinkflation

Unfortunately, shrinkflation doesn't seem like it's going away any time soon. With inflation rates on the rise, businesses are likely to continue reducing the size of their products in order to keep costs down. So what can we do? The best thing we can do is be aware of when shrinkflation is happening and shop wisely!

Concluding thoughts

While shrinkflation can be frustrating, it’s important to remember that businesses are doing what they have to in order to stay afloat. The best way to combat shrinkflation is by being informed about the products that have shrunk and making sure you are getting the best value for your money. Subscribe to ScroogeMarketer today so you can stay ahead of the curve and make smart purchasing decisions.