You Thought Inflation Was Bad, But What About Shrinkflation?
The inflation rate in the United States clocked in at 7.9% in February. That number is the highest it has been since 1982 and it has many Americans anxious about the future. According to the Bureau of Labor and Statistics energy costs have risen over 25% in the past 12 months. The sharp rise in energy prices can be most clearly seen at the gas pump where the price of regular unleaded has soared to over $4 per gallon in many places.
But there is another trend rising alongside inflation that is going to make the pain even worse. Experts are calling it shrinkflation.
Shrinkflation is the combination of inflation plus the shrinking of products by manufacturers to help offset rising costs. The result is people pay more and more for goods but start to get less in return. Not only are prices going up, but the amount of product is going down at the same time. A double whammy.
Imagine $4 for a gallon of gas only to learn that you only received 0.9 gallons instead. You are paying more for the gas and also getting less back.
Luckily, some products like gas are heavily regulated to prevent things like that from occurring. Other products are not so highly regulated.
Examples of Shrinkflation
Sometimes companies will try and shave costs by changing packaging or marketing materials. Those things do not diminish the product actually being used by the consumer. But other companies are actively shrinking the amount of product they are selling while simultaneously raising prices.
Doritos just came out and said that they were shrinking their bags by an average of 5 chips per bag. If you eat a bag of Doritos once a week that factors out to 260 chips less per year that you are paying for but not receiving.
Other products will subtly change their unit sizes by mild factors to try and sneak it under consumers' noses.