Unraveling the Phenomenon of Shrinkflation: Reasons, Illustrations, and Recognizing Its Signs
In recent years, a concerning trend has emerged in the consumer market, particularly in the United Kingdom. Known as shrinkflation, this practice involves reducing the quantity or size of consumer goods while maintaining their sticker prices. This trend has been observed across various popular brands, such as Mars Inc., which shrank Maltesers, M&Ms, and Minstrels by 15% in 2017.
Shrinkflation has become a topic of discussion in Germany as well, with the phenomenon gaining attention through consumer lawsuits. For instance, Verbraucherzentrale Hamburg took Mondelez to court over the same practice, and the Manner case in Vienna around 2022 added fuel to the debate.
The Office for National Statistics (ONS) in the U.K. has been monitoring this trend closely. From early 2012 to June 2017, the ONS found that 2,529 products shrank in size, while only 614 increased. This shift has had a noticeable impact on inflation, particularly in sugar products, where shrinkflation increased inflation by 1.2% from 2012 to 2017.
The primary reason for shrinkflation is the increase in production costs. Brands are facing higher costs for raw materials, labour, and packaging, and in an effort to maintain profit margins, they have been reducing the size of their products.
One example of this trend is the snack giant Walkers, which removed two bags of crisps from its 24-pack but kept the price the same at GBP 3.50 in the U.K. in 2021. Over time, even products like tuna cans have been getting smaller but their price has remained the same.
While shrinkflation can save consumers money in the short term by appearing to lower the price of a product, in reality, consumers are getting less for their money. To avoid this, consumers can look for the same type of product from another brand, as some companies have maintained their product sizes while keeping prices competitive.
It's important to note that shrinkflation should not be confused with disinflation, a temporary period of slowing inflation where prices are still increasing but at a slower rate. As consumers continue to be mindful of their spending, the impact of shrinkflation on household budgets is a significant concern.
In conclusion, shrinkflation has become a growing concern for consumers in the UK and beyond, with brands reducing the size of their products while maintaining the same prices. By being aware of this trend and making informed purchasing decisions, consumers can ensure they are getting the best value for their money.
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