You can see if a product is experiencing shrinkflation by comparing the price and size over time. For example, Charmin previously sold 396 sheets of two-ply Ultra Soft toilet paper for the same price as it sold a pack of 366 sheets of two-ply Ultra Soft toilet paper in July 2022. You may think that shrinkflation is a deceptive or unfair practice, but it is not illegal as long as a business is not being deceptive or engaging in unfair practices. Agencies within each U.S. state oversee weights and measurements of products, enforce item pricing laws and unit pricing regulations, and ensure price markings are accurate. Business decisions to raise prices or decrease the quantity of their packages have to abide by state consumer and business laws.
How Does Shrinkflation Work?
Manufacturers can raise the prices on their products or decrease the contents based on an assessment of demand and supply for their products. If consumers are particularly sensitive to the prices of their products, then manufacturers know there is an elastic demand for their goods. In that case, manufacturers may not want to risk raising their prices and losing customers. Instead, manufacturers may choose to decrease the quantity of the contents of their products. One of the reasons why a manufacturer may need to decrease the quantity of their contents is because input costs have risen. Some common business inputs are fuel, lumber, transportation, rent, and labor. In addition, intermediate food-item prices may have increased, which makes it more expensive for manufacturers who use that food item in making their final goods. By shrinking a product’s contents, businesses can also reduce their production and packaging costs. Whether a business raises the price or shrinks the contents of its product, you end up paying the price for inflation. You either pay more for the same amount of product or pay the same for less. For example, if a product was previously $10 and had a weight of 10 ounces, but now it has a weight of 8 ounces, the product would have decreased in size by 20%. The per-ounce cost previously was $1 per ounce and now is $1.25 per ounce. This decrease in quantity by 20% is equivalent to a 25% increase in price.
How Do You Navigate Shrinkflation?
Since many manufacturers are shrinking their products while others are raising prices, the best way you can compare products is to compare the cost per ounce of the product (the unit price). This allows you to more easily compare the cost between products and package sizes. You could also compare the price per serving to better understand costs across items. Another way to navigate shrinkflation is to buy goods that have less packaging. Eggs, apples, and lettuce are less susceptible to shrinkage in the short term. Shopping at a store that sells products in large quantities may be beneficial as there is less packaging on bulk items than those found at a typical grocery store. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
