How 'shrinkflation' amid rising food prices is 'just like a magic show': Expert

·Reporter, Booking Producer
·3-min read

With grocery prices rising, experts say consumers should be on the lookout for products also getting smaller.

In July, the cost of groceries increased 13.1% compared to last year, according to the Bureau of Labor Statistics' (BLS) July Consumer Price Index (CPI). In addition to tracking prices, the BLS also monitors "shrinkflation"— when the price of a product stays the same (or rises), but its package size gets smaller.

But according to the BLS, shrinkflation is a type of price increase. “That’s something we track and account for," Steve Reed, an economist at the BLS told Yahoo Finance. For example, when looking at the "pricing a 64-ounce [container] of orange juice and we try to price it and it’s only 59 oz; maybe it’s the same price, but for 59 ounces instead of 64 ounces, that’ll be computed as a price increase.”

Some categories where package size changes are seen the most include "certain snack type items and also household paper products, your toilet paper, paper towels," Reed said.

While the term "shrinkflation" is a buzzword of late, it was first coined by British economist Pippa Malmgren about a decade ago, and Reed said the agency has been tracking the practice for years. "I don’t think that’s a new phenomenon ... it’s something that’s gone on for a long time."

'Like a magic show'

(Courtesy: MousePrint.com)
(Courtesy: MousePrint.com)

Edgar Dworsky, founder of the consumer news site ConsumerWorld.org, recalls "downsizing" as a child.

"I remember my Mounds bar used to be 2 ounces, then it became 1.8 or 1.9," he said. Since the cost to make the treat increased, the company was likely faced with three choices, he said: Change the ingredients, increase the price, or make it smaller. Dworksy surmised the company went with making the product smaller, in part because candy machines at the time only accepted nickels.

On his other site, mouseprint.com, Dworsky features reader-submitted "shrinking" products. One example is the size of a jar of Utz Pretzels (UTZ), once 28 ounces, now only 26 ounces. Another example is the size of Quaker Life cereal (PEP) in which the cereal box name changed from "Giant Size" at 24.8 ounces to "Family Size" at 22.3 ounces.

Dworksy said its quite common for customer favorites to be re-sized and re-introduced under a new name, emphasizing "manufacturers have gotten really good" repackaging and repricing.

Data scientist Sheldon H. Jacobson of University of Illinois Urbana-Champaign says the concept of shrinkflation is "in many ways is just a magic show."

"It's much like a magician works, they do sleight of hand, they do something with their left hand, but nobody's looking at their right hand when you're doing something else," Jacobson explained.

"What ends up happening is it's no longer in their [consumers'] mind comparable, so ... the giant size becomes the family size. We can't compare those that are completely different labeling, if something is new and improved, that we can compare that it's a different product. So they're continuing in some sense, [to] befuddle the consumer, thinking they're getting something better or different, without realizing that they're getting less and paying more."

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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