Shrinkflation is a practice where companies reduce the size of their products without lowering the price. This tactic has been used for centuries to avoid raising prices directly. The term has gained more attention recently, with consumers expressing frustration on social media and even President Biden addressing the issue. Companies sometimes use marketing gimmicks to highlight this trend, such as a Canadian chain promoting a 'growflation' pizza to mock the practice. Despite the current outrage, shrinkflation is not as prevalent today as it was a few years ago. Government data shows that product downsizing was more frequent in 2016 when overall inflation was low. The trend became less common after the pandemic began in 2020 but has started to return to pre-pandemic levels. However, the impact of shrinkflation is more significant in certain categories like sweets, detergent, and toilet paper, contributing notably to inflation in these areas. Shrinkflation is easier to measure than 'skimpflation,' where companies use cheaper materials to cut costs. While shrinkflation shows up in official inflation data, skimpflation does not. Companies prefer shrinking products over raising prices because consumers are more likely to notice price increases than size reductions. However, persistent shrinkflation could backfire, as consumers become more aware and feel cheated, potentially damaging brand loyalty and driving shoppers away.
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Understanding Shrinkflation: The Economics Behind Smaller Products

Shrinkflation is a practice where companies reduce the size of their products without lowering the price. This tactic has been used for centuries to avoid raising prices directly. The term has gained more attention recently, with consumers expressing frustration on social media and even President Biden addressing the issue. Companies sometimes use marketing gimmicks to highlight this trend, such as a Canadian chain promoting a 'growflation' pizza to mock the practice.

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