Companies are reducing the content of their products—whether in size, weight, volume, or quality. This is a tactic some businesses use to mask price increases on many of the items you buy.
The Biden administration’s new economic argument is that companies took advantage of rising prices to pad their profits but are giving consumers less product in return.
Shrinkflation—a “legal but unethical” practice that keeps prices steady while delivering less product—creates the false impression that there are no price hikes. Even as inflation has moderated, consumers remain furious over high food prices.
With this “fictional economy” strategy, companies aim to hide price increases resulting from inflation-driven rises in production costs for goods and services.
The term shrinkflation comes from combining the words “shrink” and “inflation.”
The main goal is to reduce the quantity and/or quality of goods so that it doesn’t directly translate into a price increase. In other words, you pay the same amount but get less or lower-quality product.
Regardless of whether brands adjust price, quantity, or quality, the impact is similar to what would have happened with a direct price hike. Tactical shrinkflation typically occurs when the reduction falls between 5% and 10% of the total product volume, making the change easy to overlook.
The U.S. government is now cracking down on companies for shrinking the size of candy bars, ice cream containers, and other products while raising prices or keeping them the same—even as their profit margins remain high.
The president has begun accusing companies of “ripping off” Americans with these tactics and is considering new executive actions to address the practice, according to government officials and allies, though no specific steps have been outlined. He is also likely to criticize shrinkflation during next week’s State of the Union address.
Additionally, Biden may support new legislation designed to give the Federal Trade Commission more authority to investigate and penalize price-gouging practices, including in grocery stores.
Progressives who had pushed Biden to more aggressively call out corporate price hikes earlier praised his new focus. Lindsay Owens, executive director of the liberal think tank Groundwork Collaborative in Washington, said in an interview that Biden’s remarks are timely in helping voters understand why, even as inflation cools, grocery prices and other key costs aren’t coming down.
“People no longer buy the supply-chain excuse,” she said. “Shelves are fully stocked. Explaining the last stretch of this issue is a key part of the puzzle.”
Consumer advocate Edgar Dworsky noted that it was a smart move for Biden to highlight shrinkflation’s impact.
Tips to Protect Yourself from Shrinkflation
• Plan your grocery list in advance. This will help you stick to specific goals and avoid impulse buys or unnecessary purchases based on promotions for products you don’t need.
– Review your receipts and keep them for a reasonable time. This allows you to compare prices later, so you can track which products have gone up in price, which no longer have promotions or discounts, and even which have been downsized.
• Compare product weights. Experts recommend changing how you evaluate products. Instead of choosing based on the most attractive price or current promotions, compare the price per gram, kilogram, or liter—not just the total package price. That’s when you’ll truly see the cost and whether a product has been affected by shrinkflation.
– Don’t fall for fake discounts. It might just be a marketing strategy: If your favorite product’s price has dropped, it could also mean its quantity or volume has decreased.
• Compare prices across different stores. Some products vary in price depending on where you buy them. The final price is set by the retailer, which takes a percentage of the profit per sale, so prices can differ.
• Prioritize bulk or wholesale purchases. This often gives you a better price per unit and quantity.
• Switch your favorite brand for a larger, equally high-quality option.
Image: Hogarmania
