Last modified on March 25, 2024, at 09:35

Shrinkflation

Shrinkflation is a result of higher producer costs due to inflation caused by excess government spending.[1]

Two methods by which sales corporations meet the challenge of rising producer prices by marketing products that appear the same or cheaper, but aren't[1]. The first method relies on reducing the size or volume of the product while holding the price steady. (i.e. 4 oz. instead of 6 oz.)[2] The second method involves shrinking the packaging and reducing the price ever so subtly that it appears that the original product has undergone an amazing price cut, when in fact, no such price cut has been made, only a new, smaller, product is for sale. i.e. butter, ice cream, and other dairy products[2].


An example of the first method:

Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Price $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Volume* 100:0** 98:2 89:11 78:22 75:25 73:27 67:33 60:40 48:52 33:67 22:78 0:100***
Size 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in
  • *A ratio of product to air.
  • **All product, no air.
  • ***You are buying air.

Product Price and Size remain constant, internal content dwindles.


An example of the second method:

Jan.** Feb. Mar. Apr. May. Jun. Jul. Aug.*** Sep. Oct. Nov. Dec.****
Price $1.00 $1.25 $1.75 $1.79 $1.99 $2.05 $3.10 $3.11 $2.43 $2.34 $2.32 $2.23
Volume* 80:20 80:20 80:20 80:20 80:20 80:20 80:20 60:40 60:40 60:40 60:40 60:40
Size 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 10x10 in 9x9 in 9x9 in 9x9 in 9x9 in 9x9 in
  • *A ratio of product to air.
  • **Initial price.
  • ***Peak price.
  • ****Final price after adjustment.

The final price is less than the peak price, while greater than the initial price, while simultaneously having less for that price than the initial price.

References

See also