You might’ve noticed smaller Gatorade bottles, fewer trash bags per package or less chips in your Doritos bag. You're not imagining it, Gatorade did change its 32-ounce bottle to a 28-ounce one—while keeping the height of the bottle the same—under the guise that “it's easier to grab.” And Hefty’s mega pack of trash bags decreased from 90 to 80 bags. Similarly, Frito-Lay’s Doritos bags went from 9.75 ounces to 9.25 ounces. However, despite the shrinking sizes, the prices of these products have remained the same. These are just a few examples of what economists have deemed “shrinkflation.”
What is shrinkflation?
As you might’ve guessed, shrinkflation is a combination of the words “shrink” and “inflation.” To put it simply, shrinkflation is the reduction in a product's size but not its price. Manufacturers often employ sneaky strategies to hide the shrinking of their products, such as adding more air to the package or changing the shape and design of the packaging. This phenomenon is common in food and household commodities, but it does not generally affect goods sold per pound or gallon—like steak or gasoline—because these units of measurement cannot be downsized.
Shrinkflation is closely related to skimpflation, in which companies skimp on the quality of a good or service while holding prices steady. Skimpflation is an even sneakier form of inflation because quality is harder for consumers to observe than size.
Why do businesses engage in shrinkflation?
Shrinkflation is good for business, and manufacturers know this. A 2004 Harvard study showed that consumers are more sensitive to changes in price than to changes in quantity, meaning decreasing product sizes results in a smaller-than-proportional decrease in purchases.
Shrinkflation tends to occur during periods of inflation. Currently, the U.S. economy is dealing with relatively high inflation rates. In particular, food prices are up 2.1% compared to last year. Inflation causes rising costs for manufacturers who are challenged to maintain positive profits. As a result, they engage in strategies like shrinkflation to cut costs while maintaining sales.
How have legislators responded to shrinkflation?
Although some consumers aren’t aware of shrinkflation, lawmakers have addressed growing concerns about the phenomenon. While shrinkflation is legal as long as companies indicate sizes on their packages, it is a purposefully deceptive tactic. In February, Sen. Bob Casey introduced the Shrinkflation Prevention Act. This bill would direct the Federal Trade Commission (FTC) “to establish shrinkflation as an unfair or deceptive act or practice, prohibiting manufacturers from engaging in shrinkflation.” It would also authorize the FTC “to pursue civil actions against corporations who engage in shrinkflation.” The bill is just one step that Sen. Casey believes the government can take to hold corporations responsible for taking advantage of American workers and their families.
Pres. Biden has also contributed to the discussion by endorsing Sen. Casey’s bill. With an upcoming presidential election, Biden’s endorsement is part of his broader strategy to divert criticism about high prices and instead shift the blame onto big business.
How can you protect yourself from shrinkflation?
First and foremost, paying closer attention to package sizes and per-unit pricing can help you spot shrinkflation in the products that you regularly buy. Also, comparing the cost per ounce or unit—instead of per package—for similar products can help you determine which is actually cheaper. Substituting packaged items for non-packaged ones can help, too; manufacturers can downsize a cereal box, but they cannot downsize a pound of fruit.
The bottom line
Shrinkflation is an inherently deceptive tactic that hurts American consumers and lines the pockets of big business CEOs. It contributes to an increase in packaging waste; you may have experienced this firsthand when opening a bag of chips that’s filled with more air than chips. Also, this hidden inflation can strain household budgets, especially for lower-income families who spend a higher proportion of their income on basic necessities. Over time, income inequality can widen as a result, as the burden of shrinkflation falls disproportionately on those least able to bear it. Only through legislative efforts can we ensure that consumer interests are prioritized over company profits and that economic activities contribute to the well-being of society as a whole.
Acknowledgment: The opinions expressed in this article are those of the individual author.