What is shrinkflation?

Potato chips
Image: Getty

Shrinkflation is the practice of shrinking the size of consumer products while maintaining the price. 

A number of companies have been upping the price per given amount in recent years as a way to save money and boost their profits.

However, due to the variety of reasons given for shrinkflation practices, some of the changes occur quietly and without too much attention paid. And yet, the size of some products - or at least the quantity of product within the very same packaging - has so dramatically changed that consumers are increasingly aware of this issue.

Typical shrinking products include potato chips, chocolate bars, toilet paper, washing detergent, household cleaners, cereals and breads. Although paying more for less is widespread across many more products, including fruit and vegetables. 

Why are companies shrinking products?

The simple answer is so they can save money and boost profits. 

The more complicated answer is because shops claim other stops in the supply chain have increased their pricing, be it at the supplier, with packaging, transportation or even on the farm. The end result is a smaller take home product sold at the same price as before.

Of course, prices often increase across the supply chain when inflation is high, as it has been for the past couple of years. However, shrinkflation has been widely reported as occurring prior to this current high inflationary period as far back as 2016. In this way, it’s been used as a sort of hidden inflation. 

How is shrinkflation measured?

Shrinkflation is captured in official inflation data by the Australian Bureau of Statistics.

In particular, the ABS observes where the quantity (or volume) of a product falls but the price remains the same. It then calculates the adjusted price as a percentage and includes this in its official Consumer Price Index. 

However, some costs to consumers will usually be missed in statistics because some businesses use cheaper materials to save money. This is obviously much harder for the government to measure.

Will shrunken products go back to normal?

It’s not likely. Once the change is made, most companies want to establish a ‘new normal’. Some are even said to take advantage of the smaller product version by using it as a way to market a new ‘bonus size’ iteration that’s a bit bigger and presumably more expensive.

Is shrinkflation legal?

Unfortunately there are no laws preventing companies from using shrinkflation tactics. 

Though many money experts suggest retailers should be required to let consumers know when a product has changed in size and value so that they can make more informed buying decisions.

What can I do to combat shrinkflation?

Beating shrinkflation starts with awareness. When you’re next in the shopping aisles, try some simple comparisons. Check the contents and price before you throw something in the trolley.

Ask yourself:

  • Does the product in question look different than before? 
  • Is it smaller or lighter in weight?
  • Does it look or feel like there are fewer 'units' inside?
  • Does the box or packet have a different label?
  • Is another brand noticeably cheaper? 

Once you've drawn some initial conclusions, you might be in a better position to either select a different more-value-for-money product, or even decide to shop elsewhere.

Local market stalls, farmer’s markets and even small suburban grocers might also offer more value for money on some items. It’s worth shopping around. 

3 everyday ways to beat shrinkflation

If you’re looking for other practical ways to beat the potential sting of shrinkflation, it can help to be frugal across the board. 

So here are three simple cost-saving ideas that can help:

  1. Cut back on discretionary spending: Spending less money is also about knowing what not to buy. We all have non-essentials we could skip for a while. These can include streaming subscriptions, take-away food, expensive fashion items or even too much travel. 
  2. Cook at home: Eating out can be costly. Organising your meals and budgeting for your own ingredients can go a long way toward reducing your weekly spend. In many cases it can also be healthier!
  3. Consolidate your debt: Paying interest across credit cards, buy now pay later services, personal loans or even car loans can add up. But you can actually roll your debts together into a debt consolidation loan, which can really save you on total interest expenses.

Save money in all areas of your (financial) life

Shrinkflation is just one aspect of our economic world that can trip us up. The reality is that to save money we should always stay on top of all our personal finances. 

For example, when you compare personal finance products, you’ll notice there are significant differences between them and therefore a number of ways to save on each.

At Mozo, we suggest to save more and improve your budget further you can:

And finally, review your budget and see where you can cut back.

If you need some help selecting the right financial product for your needs, be sure to check out our Mozo Expert Choice Awards, which includes the top choices from our in-house experts.

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