Shrinkflation

Confectionery

In economics, shrinkflation is the process of items shrinking in size or quantity, or even sometimes reformulating or reducing quality while their prices remain the same or increase. The word is a portmanteau of the words shrink and inflation.

Shrinkflation allows companies to increase their operating margin and profitability by reducing costs whilst maintaining sales volume, and is often used as an alternative to raising prices in line with inflation. Consumer protection groups are critical of the practice because it has the effect of reducing product value by ‘stealth.’ The reduction in pack size is sufficiently small as not to be immediately obvious to regular consumers. 

An unchanged price means that consumers are not alerted to the higher unit price. The practice 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. Suppliers and retailers have been called upon to be upfront with customers.

According to Ratula Chakraborty, a professor of business management, they should if necessary be legally obliged to notify shoppers when pack sizes have been reduced. 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.

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