Buyers of groceries are noticing something strange. Bags of chips filled with air. Shrunken soup cans. Smaller detergent packages. Companies are reducing the size of their products without reducing prices, and consumer comments, from Reddit to TikTok, to The New York Times comment section, are overflowing with outrage over this trend, known as shrinkflation.
The practice is not new. Sellers have been discreetly reducing product sizes for centuries to avoid raising prices, and experts believe it has been an obvious corporate strategy since at least 1988 when the brand Chock Full o’Nuts reduced its 455-gram coffee can to 368 grams and its competitors followed suit.
But the outrage today is more pronounced. President Joe Biden echoed the anger in a recent video. (“What makes me the most angry is that ice cream containers have decreased in size, but not in price,” he lamented). Companies themselves exploit this practice with advertising tricks. A Canadian chain introduced a growflation pizza. (“In pizza terms,” the company’s press release joked, “a bigger slice”).
But how does shrinkflation work from an economic point of view? Does it happen more frequently in the United States, and if so, does it mean that official data do not reflect the true extent of inflation? Here we explain the trend and what it means for your wallet.
Shrinkflation was rampant in 2016
It may be hard to believe, but shrinkflation seems to be happening less frequently today than a few years ago. The U.S. government adjusts official inflation data to account for product size reductions, and data collectors monitoring size adjustments detected fewer cases of household and food item reductions in 2023 than in previous years.
Shrinkflation was common in 2016 when overall inflation was low. It became less frequent after the start of the pandemic in 2020, and more recently has started to return to pre-pandemic levels, according to analysts at the Bureau of Labor Statistics. (Economists noted that the set of products being measured changed somewhat over the years, making comparisons over time more of an approximation than an exact science).
But the magnitude for some products is now more pronounced
Although size reductions may not occur as frequently, shrinkflation is having a significant impact on some key categories, such as snacks, detergent, and toilet paper. From 2019 to 2023, shrinkflation added about 3.6 percentage points to inflation for products like paper towels and toilet paper, compared to 1.2 percentage points from 2015 to 2019. In recent years, shrinkage has also contributed more to the price increases of snacks and cleaning products.
For snacks, size reductions added 2.6 percentage points to inflation, roughly in line with what they contributed from 2015 to 2019. The government has not yet published an analysis of shrinkflation’s contribution to overall inflation from 2019 to 2023.
Shrinkflation is measured, but not skimpflation
The shrinkage itself is reflected in official inflation data, but there is another hidden force that represents a cost to consumers and does not appear in the statistics. Sometimes companies use cheaper materials to save costs, a practice some call skimpflation. For the government, this is much more difficult to measure.
If the roll of paper towels costs the same but the number of sheets is lower (shrinkflation), the increase in unit price is added to official inflation. If the paper towels are the same size but suddenly made of poorer material (skimpflation), the government does not record it as inflation.
In fact, according to government statisticians, food and household products do not directly adjust to quality changes other than size and weight. Thus, if the microwave food brand you buy starts using vegetable oil instead of olive oil, or if the resealable packaging comes without its closure, it will not be noticed.
Companies do it because it works
Companies choose to shrink their products instead of charging more for a simple reason: consumers tend to pay more attention to prices than sizes.
When the quantity decreases, “people may notice, but often they don’t,” says John Gourville, professor at Harvard Business School. “They don’t see the impact on the label.”
A famous example is Dannon, which used to sell yogurt in larger containers than its competitor Yoplait: 226 grams versus 170 grams (eight ounces versus six). Consumers were convinced that Dannon yogurt was more expensive and did not realize it was simply larger. In the end, the company relented and reduced the size of its containers.
“Dannon’s yogurt sales, which immediately declined after the size reduction, have since rebounded,” reported the Times in 2003. “And Dannon now pockets a higher profit for each yogurt cup sold.”
Not all size changes are equal. Some can be surreptitious, like increasing the size of a groove at the base of a jar or trimming the corners of a bar of soap. Consumers find it especially difficult to recognize size changes when they occur in three dimensions, says Nailya Ordabayeva, associate professor at Dartmouth’s Tuck School of Business, who has studied consumer responses.
“The brain is programmed to perform simpler heuristics,” she explains.
Additionally, she noted, consumers may be willing to accept smaller quantities or even prefer them in some cases. For example, junk food products have sometimes been shrunk to reduce the number of calories.
Still, consumers may react negatively
When companies focus only on their profits—and not on their consumers—there is a fear among pricing experts that persistent shrinkflation may drive away buyers.
When raw material costs were rising and inflation was in the news, consumers were likely to understand that companies needed to pass on some of those increases. They might even prefer smaller products over higher prices, according to several experts.
But now that overall inflation has calmed down—after peaking at 9.1 percent in July 2022, it had dropped to 3.1 percent by January—consumers may be less willing to accept shrinkflation now that companies are facing less severe cost pressures, especially since food company profits have been—and in many cases still are—high.
They may simply feel cheated.
“I see consumers becoming increasingly aware of the existence of shrinkflation,” said Jun Yao, marketing professor at Macquarie University in Australia, who has studied this trend.
And as more chains and online retailers publish unit costs, buyers may be more attentive to size changes, Yao said, something that could counteract portion shrinkage in the future.
This practice, he said, “could be counterproductive and damage brand image.”
Jeanna Smialek writes about the Federal Reserve and the economy for the Times from Washington. More from Jeanna Smialek.
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