Shrinkflation: When Prices Go Up and Quantities Go Down
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The intervention focuses on “shrinkflation”, where companies reduce product sizes while increasing prices. For example, Lay’s chips packets decreased from 150g to 135g, raising the price per 100g by 60%.
- Shrinkflation, while legal, is a marketing tactic to maintain prices by reducing product sizes.
- Examples include wider gaps in Toblerone bars, fewer gum pieces in packs, smaller Pringles, and less cream in Oreos.
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French Economy Minister Bruno Le Maire criticized the practice of shrinkflation as misleading and abusive. For instance, Pampers baby diapers were reduced by three per pack, while the price increased by €3.28, equating to a 10-cent increase per diaper.
- There is a call for greater transparency in product labeling and potential legislative changes to address shrinkflation.
Shrinkflation: are we being taken for a ride?
- Rodolphe Bonasse discusses “shrinkflation,” where product quantities decrease while prices remain the same or increase.
- Shrinkflation can be hard for consumers to detect, as they may not notice the reduced quantity but end up paying more.
- Emphasizing unit pricing (price per kilo or liter) can help manage grocery budgets better.
- The lack of regulation allows companies to use these practices, prompting calls for greater transparency.
- Concerns are raised about the impact on consumers with limited budgets and the need for government intervention to protect consumer interests.
- Approximately 30% of French people have a monthly budget of less than 100 euros, requiring urgent state and economic system intervention to prevent widespread social decline.
Shrinkflation is a practice that has increased in recent months. NGOs denounce it as a form of hidden inflation and call for transparency on product labels.
Manufacturers use this method to boost their revenues in response to the inflation they face. To explain these price increases, they might need to clearly inform customers about their purchases. For instance, by adding new labels that educate consumers on the product’s industrial processes and ingredients used.
Retailers offer their store brands with frozen prices to fihgt shrinkflation, negotiating prices with manufacturers.
How to fight shrinkflation?
- Be vigilant and read product labels carefully.
- Opt for store-brand products, which are often cheaper.
- Avoid bulk packs, maxi formats, and family-sized products, which may appear to be a good deal but can conceal price increases.
Shrinkflation : a common practice
Shrinkflation is a concept that combines the terms “shrink” and “inflation.” It describes the reduction in the size or quantity of a product while its price remains unchanged. This legal and authorized method ensures that the displayed price of a product does not change even if its production costs increase. The only way to maintain the product’s price is by reducing its size.
What causes shrinkflation ?
- One of the main reasons for shrinkflation is the rising costs of production, such as increases in the prices of raw materials and labor costs.
- Another cause is consumer behavior, as consumers tend to be more sensitive to price changes than to changes in the size or weight of a product. This leads companies to reduce the size discreetly rather than raise the price.
- Additionally, companies use subtle marketing techniques, like misleading packaging designs, to minimize the perception of size changes, often with little or no communication about these modifications.
What are the consequences of shrinkflation?
- The direct consequence for the consumer is a decrease in purchasing power. Additionally, this phenomenon can lead to a feeling of being deceived by manufacturers.
- For brands, shrinkflation can result in a loss of consumer trust, potentially driving customers towards more transparent competitors.
- On a macroeconomic scale, shrinkflation contributes to a form of hidden inflation that is not easily measurable.
Shrinkflation : Carrefour calls out about thirty products
Inflation has significant consequences on the economy and household purchasing power. Urgent measures are necessary to address this crisis.
Carrefour has called out about thirty shrinkflation products in its supermarkets. The goal is to be more transparent towards consumers. Carrefour will use orange labels to proceed to name and shame. The chain commits to renegotiating its prices with manufacturers affected by shrinkflation.
Inflation: a powerless government?
- Inflation in France remains high, hovering around 5% in August compared to the previous year.
- The French government is seeking solutions to address the impact of this inflation on purchasing power and the increase in poverty.
- Carrefour, a major retail chain, has highlighted this issue by identifying 26 products in their stores affected by shrinkflation.
- The government plans to introduce a law making it mandatory for manufacturers to be transparent when they reduce the quantity or quality of the product, aiming to solve the inflation problem.
