Inflation is upon us, and a hidden gem used by companies to combat price increases is often hidden from the unaware. It’s called shrinkflation. Here’s what you need to know about this hidden price hike and what you can do to cope with its effects

Defining shrinkflation

Shrinkflation is the technique of downsizing a product or ingredients to lower costs. In many cases the retail price of something will not change, but the amount of product in the package is lowered. Common techniques include putting less in a package or changing the amount of a high-cost ingredient in the product.

And the changes are often subtle. Would you realize the amount in a box is lowered by 1/2-an-ounce if the box stays the same size? Or that your cereal has fewer raisins in it than a month ago?

Edgar Dworsky, a former assistant attorney general in Massachusetts, recently spoke with the Consumer Federation of America about changes he’s been tracking in grocery isles. Here are some recent examples of shrinkflation:

• Kimberly-Clark’s Cottonelle Ultra Clean mega rolls of toilet paper are reduced from 340 sheets to 312
• Keebler’s Chips Deluxe with M&Ms packages are now 9.75 ounces, down from 11.3 ounces
• Gatorade’s 32-ounce bottles are now 28 ounces
• Cadbury is reducing the size of its popular chocolate bar by 10%

Knowledge is key

While many manufacturers are transparent about these changes as they combat inflation, it is not as apparent to spot when you are shopping. Here some are suggestions to help you identify and combat shrinkflation.

• Focus on unit cost. Instead of focusing on the price of the product, look for the unit cost of the item. Grocery stores can be very helpful in this area, as most tags will show a common unit of measure below the items for sale. If you shop at a store that doesn’t provide this information, you can still calculate the unit price using the information printed on the front of a product’s package.
• Compare the packages. When you replenish your popular shopping items, spend a minute to compare the product with the last one you purchased. Make a mental note if the packaging or number of items in the package is changing.
• Have alternatives. Perhaps it is time to try another toilet paper brand, or choose a different cookie. Many store brands are a great alternative to the market leaders.
• Offset shrinkflation with deals. This includes reviewing featured items at different shopping locations, looking at a store’s weekly flyer for deals, loading up on favorite items when they are on sale, participating in a store’s loyalty program, and looking for coupons using online services.

Remember, inflation is here and everyone needs to cope with it, including manufacturers. But by being aware, you can retain some control to reduce inflation’s impact on you and your family.

— By Nancy J. Ekrem, CPA, Managing Shareholder
DME CPA Group PC
Certified Public Accountants & Business Consultants
nekrem@dmecpa.com