Shrinkflation: You’re Paying More And Getting Less

We are all keenly aware of price inflation. We notice those rising prices every time we go into a store. But the inflation boogeyman is hitting you even harder than you realize. Not only are you paying more for pretty much everything you buy, you’re getting less.

This article was originally published by Schiff Gold.

Literally.

It’s called shrinkflation.

Rising prices don’t just hit consumers. In fact, they impact producers first. As the cost of materials, labor and equipment goes up, companies feel the pinch. Eventually, they pass those costs on to their customers.

But raising prices is bad for business, so sometimes, companies find other ways to cut costs. They shrink packages or simply put less stuff in the same size box. While the price stays the same, you get less product.

Shrinkflation doesn’t show up in the CPI and consumers often don’t even notice, but the effect is the same as rising prices. You ultimately end up with less stuff. It is ninja inflation.

“Downsizing is really a sneaky price increase,”  former Massachusetts assistant attorney general Greg Dworsky told NPR during an interview. “Consumers tend to be price-conscious. But they’re not net-weight conscious. They can tell instantly if they’re used to paying $2.99 for a carton of orange juice and that goes up to $3.19. But if the orange juice container goes from 64 ounces to 59 ounces, they’re probably not going to notice.”

MousePrint.org chronicles shrinkflation. Here are some recent examples.

• Double rolls of Bounty paper towels have shrunk from 98 select-a-size sheets to just 90. Triple rolls were downsized from 147 select-a-size sheets per roll to 135.
• The standard 92-ounce bottle of Gain detergent is now 88 ounces.
• A family-size bags of Double Stuf Oreos now have four fewer cookies in each bag. (Did the family shrink?)
• The 19.4-ounce bottle was downsized to 18 ounces.
• A package of Sara Lee blueberry bagels was reduced from five to four bagels as the package weight dropped by 3.3 ounces.
• Green Giant frozen broccoli and cheese sauce packages were reduced from 10.0 oz. to 8.0 oz. with no change in the advertised number of servings per package.
• Ice cream companies have generally dropped the standard 56-ounce container to 48 ounces.
• A tube of Crest Detoxify toothpaste dropped from 4.1 ounces to 3.7 ounces.
• Kettle potato chips switched from 8.5-oz. bags to 7.5-oz. bags.
• A package of Ortega taco shells dropped from 5.8 ounces to 4.9 ounces.

We also see shrinkflation in services. Remember full-service gas stations? Now, we pump our own gas, bag our own groceries and manage our own investment portfolios.

Misplaced Blame

Consumers often don’t notice shrinkflation, but when they do, they get angry, and they usually direct their anger at the “greedy” corporations who are charging them the same amount of money for less product. But there is another culprit who generally slinks around unnoticed.

The Federal Reserve.

Price inflation is a symptom of monetary inflation. As the central bank creates money out of thin air and injects it into the economy, prices generally rise. Economist Murray Rothbard noted that since governments have deemed “paper tickets” and computer digits money, “then the government, as dominant money-supplier, becomes free to create money costlessly and at will. As a result, this ‘inflation’ of the money supply destroys the value of the dollar or pound, drives up prices, cripples economic calculation, and hobbles and seriously damages the workings of the market economy.”

Companies are merely responding to their own cost problem when they shrink package sizes. If they didn’t, they would have to raise the price. And that would make you mad too!

When it’s all said and done, you end up paying more and getting less.