Very recently, President Biden garnered much attention on a video on social media attacking food companies over “shrinkflation.”
Now what was he talking about? British economist Pippa Malmgren in 2013, first used it. For manufacturers’ practice of making products smaller rather than raising prices. But post pandemic, 2022 is the year that the word got big.
It’s a strategy that’s meant in part to hide price hikes; a more expensive product might turn shoppers off, but a chip package with a handful fewer chips, and the same price, is a sneakier way of giving consumers less for their buck.
When producers know that increasing prices on their products may reduce demand and risk losing market share to competitors, they may resort to shrinkflation. In this case, they maintain the same product prices but reduce product quantities. You may have experienced this with bread, milk, coffee and tea.
But that is not all, there is another sister word Skimpflation! In this case, companies reduce the quality of their products by swapping materials, removing some ingredients, or even selling some product accessories separately. This is more notorious and may often fly under the radar of the most alert shopper.
This kind of covert skimping doesn’t just happen at the grocery store or the drive-thru lane. It’s been present in American healthcare for more than a decade. More apparently when I renewed my Healthcare plan the deductible (The amount you pay for covered health care services before your insurance plan starts to pay.) peaked by $100. And the premium jacked up to double.
When every other sector of the U.S. economy struggled amid a raging pandemic, the nation’s top health insurance companies—UnitedHealth Group, Anthem and Humana—doubled their profits. While every patient was facing financial devastation of a major medical crisis, did any hospital go bankrupt?
American senators are asking major food and beverage trade associations how their members came upon their new pricing — and if they’ve notified customers about how their product sizes have changed. In France, for instance, a supermarket has stuck warnings on it shelves about products that have been shrinkflated, as the BBC reports.
American families are getting less for their money. It is obvious that the cost of toilet paper rose; it is harder to detect those rolls shrank in size. But both have the same effect: American families are getting less, and corporations are making more.
Shardul Bhatt 