SYRACUSE, N.Y. (WSYR-TV) — You may not know it yet, but the staple products in your kitchen and pantry are shrinking. Literally.
“Shrinkflation,” is a practice companies have implemented in the past and one we are seeing accelerate rapidly over the past few months.
Professor of Economics at Binghamton University, Kenny Christianson says manufacturers that cant simply raise the cost of their products are instead shrinking them in different ways, without lowering the prices.
“You can increase revenues if you just raise the price of your product. But especially in competitive markets, it might be difficult to do that because you might lose a lot of your customers to their rivals if you raise your prices too much,” he said.
“So other things are trying to find ways of lowering your costs, and some ways of doing that is to shrink things, basically making things smaller. So candy bars get smaller. The sandwiches I’ve been buying at the supermarket lately have less meat on them, things like that.”
Another example is with your typical 32 oz Gatorade bottle. Customers reaching for those bottles in the past would pay $2.99 but now, as Gatorade is phasing those bottles out for different design, the cost remains the same, only for 4 less fluid ounces.
Other examples found were Chobani Flip yogurts which were once 5.3 oz and now just 4.5 for the same price. Even chips, which already see their bags literally inflated with sometimes more air than chip, are experiencing shrinkflation. Bags of Fritos scoops once were 11 oz and now are down to 9.25.
“You have to find other ways of increasing your profits or meeting your bottom line,” Christianson says, “So in order to do that, sometimes they can just either reduce quantity and keep the price the same or reduce quality. And then (that way, you’re able) to at least keep your prices a little bit lower than it would be if you had to keep the same quantity and quality.”
Christianson says there are several factors that lead to this including the war in Ukraine, which is driving up the price of oil and having a ripple effect through the supply chain, and, of course, the pandemic’s lasting effects.
“Covid has really caused a lot of declines, especially in profits for firms,” he said. “Because they’ve seen increasing costs a lot, especially resource costs.”
“And labor costs and costs for fuel and stuff have been rising a lot because of Covid and shortages. And recently, increased demand have also been raising prices a lot. And so firms are faced with shrinking profits and maybe losses if the profits shrink too much. And because of that, they’ve got to try to find some ways of trying to gain profits.”