If you have noticed fewer chips in a packet you bought or the size of the packet itself is smaller than it used to be, while you are paying the same amount if not more, in some cases, for that bag of chips, that’s shrinkflation. United States President Joe Biden, on Sunday (Feb 11) called on snack companies to stop shrinkflation and denounced the practice as a “rip-off.”
‘Give me a break’
“Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won’t notice,” said the US president in a video posted on X ahead of the annual American football championship Super Bowl LVIII.
He added, “Give me a break. The American public is tired of being played for suckers. I’m calling on companies to put a stop to this. Let’s make sure businesses do the right thing now.”
However, Biden did not offer any tangible solutions or policies to address the practice.
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Last year, US Senator Bob Casey, who chairs the Senate Health, Education, Labor, and Pensions (HELP) Subcommittee on Children and Families released a report which found that companies had reduced the sizes of almost all their products from toilet paper to Oreos.
According to Casey’s report household paper products were 34.9 per cent more expensive per unit than they were in January 2019 and more than 10 per cent of this increase has been attributed to shrinking the sizes of rolls and packages.
The US Senator’s office has also sent letters to the trade associations which represent household consumer products and food and beverage companies demanding that they explain these pricing strategies and package size practices, as well as the impact it has on consumers.
Shrinkflation and US economy
Shrinkflation is when companies reduce a product’s size or quantity but keep prices the same or in some cases increase the price of that commodity. The practice is particularly common in the food and beverage industries and can help them stealthily boost profit margins.
This phenomenon, or at least the term, has been around for more than a decade now but became popular during and after the COVID-19 pandemic as the global economy grappled with supply chain issues and rising raw material costs.
After the pandemic, inflation in the US soared prompting the Federal Reserve to increase interest rates to cool down the rising prices. The central bank hiked its benchmark rate 11 times since March 2022 but no new increases were announced in December and January.
The inflation in the US has reportedly slowed down from over nine per cent to 3.4 per cent, if this number holds steady, the Federal Reserve may lower interest rates, according to media reports.
(With inputs from agencies)