Consider This from NPR - You're Not Imagining It; Shrinkflation Is Real

Episode Date: March 13, 2024

Here's one sign that shrinkflation is no longer just a topic for economics nerds. Cookie Monster recently complained on social media that his favorite food was getting smaller. "Me hate shrinkflation!" the fuzzy blue monster declared. "Guess me going to have to eat double da cookies!" President Biden promised to sign a bill banning it during his State of the Union address.Shrinkflation isn't new. It's been happening for years. But people seem to be paying more attention right now amidst high food prices and inflation. And the White House is clearly aware of that. After years of rising prices, many Americans are fed up with paying more and getting less. Will the pendulum ever swing back? For sponsor-free episodes of Consider This, sign up for Consider This+ via Apple Podcasts or at plus.npr.org. Email us at [e-mail] more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

For a while, it seemed like everything was getting big. Supersize makes it my place. Supersizes are back. Supersize, family pack. From fast food to paper towels, brands liked to claim their products would give you more bang for your buck. But for a while now, something has been quietly changing. And people on social media are noticing, like in this TikTok. Companies are out here gaslighting us into thinking that shrinkflation isn't real.

Look at that. There's like three chips. There's three chips in the whole bag. Shrinkflation essentially means that companies are selling less product for the same price. And after years of inflation hurting people's budgets, knowing that you aren't even getting the same amount of stuff for your dollar can leave you feeling a little cheated. President Biden even mentioned this in his State of the Union address. In fact, the snack companies think you won't notice if they change the size of the bag and put a hell of a lot fewer, same size bag, put fewer chips in it. No, I'm not joking. It's called shrinkflation. Pass Bobby Casey's bill and stop this. He means Senator Bob Casey, Democrat from Pennsylvania.

Casey has proposed legislation meant to empower the Federal Trade Commission to investigate companies for price gouging practices. He told NPR this week the problem goes deeper than shrinkflation. This one example of shrinkflation is part of a much broader problem, which is greedflation. We know that corporate profits went up by 75 percent from July of 20 to July of 22, and that's five times the rate of inflation. So they're jacking up their prices, and there's no consequence. Consider this. After years of rising prices, many Americans are fed up with paying more and getting less.

Will the pendulum ever swing back? From NPR, I'm Ari Shapiro. It's Wednesday, March 13th. It's Consider This from NPR. I'm Ari Shapiro. Here's one sign that shrinkflation is no longer just a topic for economics nerds. Cookie Monster recently complained on social media that his favorite food was getting smaller. Me hate shrinkflation, the fuzzy blue monster declared. Guess me going to have to eat double da cookies. Trinkflation is not a new concept. It has been happening for years, but people seem to be paying more attention right now. And the White House is

clearly aware of that. So can Biden use this as a touch point to connect with millions of Americans who feel cheated by companies? I talked to NPR business correspondent Alina Selyuk about all that. Hey, Alina. Hello, hello. Okay, so just to be clear, it's not our imagination. We really are getting less stuff for our dollar these days. Some stuff. I am always scared of sounding like, back in my day, bottle of Coca-Cola cost a shilling and three pence. But shrinkflation is a newish term for something that's been going on for quite a long time. It is a variant of inflation. It's a version of inflation.

Our colleague Greg Roselski at Planet Money called it inflation's devious cousin because essentially it hides a price increase in plain sight. Companies sometimes will shrink a product and then raise a price later. That is a double whammy of shrinkflation. And these days we're seeing it in coffee and cereal and shampoo, paper towels. In 2023, we at NPR did our own research that found Dove soap and Tide laundry detergent both shrunk a little bit while costing more money. These are some of the examples. And what kinds of things beyond those you mentioned is shrinkflation happening to these days? It's more than just laundry detergent and toilet paper, right? Yes. The Bureau of Labor Statistics actually tracks shrinkflation as part

of its research on consumer prices. And they're saying that paper goods, snacks, candy, and cleaning products get downsized the most. You'd mentioned Senator Bob Casey, who has a report on shrinkflation. And that report also calls out specific brands, Oreos, Wheat Thins, and Doritos. Mostly it's packaged goods because there's a lot of stuff you can't really shrink if you wanted to, a dozen eggs can't really shrink that. I do wonder, you know, there is kind of a universe of stuff that is getting smaller beyond food items. You know, can we put in smaller seats on planes in a version of shrinkflation? I'm 6'3", I hope not. They have been, they have been getting a little smaller. Overall, you know, downsizing is a pretty

old trick. And historically, like candy bars are one of the most clearest examples. Back in the day, they would shrink the size of candy bars so they could stay at the same price in those old timey vending machines. This has been around for such a long time that I'm curious why the president is bringing it up in his State of the Union address now. Is it getting worse? On the question of whether it's getting worse, the Bureau of Labor Statistics does say that overall for inflation, shrinkflation has a, quote, minuscule impact. They're saying it is a small portion of products that are getting affected. Manufacturers are downsizing a little less frequently than a decade ago, although for very specific items, changes can be pretty dramatic. Now, for the question of why Biden is bringing it up, there's very clear economic context, right? Inflation. Inflation is cooling, but it did hit 40-year high two years ago. Prices are still inching up. We have wages that are climbing faster than prices. But when you think about buying power of those wages, that buying power has yet to fully recover. And you have President Biden trying to convince voters

that the economy is getting better. Voters are telling pollsters that they disapprove of his handling of the economy, despite kind of a slew of indicators, you know, strong labor market, low unemployment, faster economic growth than many forecasters had expected. But he has zoomed in on these various costs as a way to connect with people. And it is a popular, it's a popular cause. It feels so nefarious when we think about like a big cereal box with a small amount of cereal or a smaller container for laundry detergent. Are companies trying to trick people here? If you think about it in a way that is a bit of a trick and that they're hiding a price increase without sort of hitting you in the face with it,

people tend to focus on the prices a lot more than the sizes or the volume. And the companies will have excuses for it. They will explain themselves by saying, you know, the ingredients that they're using are getting more expensive. They will point to higher costs of packaging, of labor, of shipping, of trucks. In some cases, companies will say they're trying to do a better quality product. For instance, you might get fewer inches of paper towels, but every inch is more absorbent. My favorite example was when Gatorade redesigned its bottle to be smaller and then claimed it was more aerodynamic. That is a great example.

At Planet Money, Greg Rosalski had asked General Mills about smaller sizes of their cereal, and they said that was so that the packages were more efficient to go in a truck, therefore meant fewer trucks driving on the road. Therefore, there's less fuel being used altogether, saves on costs and on emissions. Of course, critics, like many of the Democrats, call it greedflation. They say that companies are basically trying to get bigger profits. Companies might be doing this to compensate for other financial pressures, but do they really save that much if they put 10 fewer chips in the bag of Doritos? Yes, because they make millions and millions and millions of bags of Doritos.

The thing about this is that it keeps working as long as people keep buying, right? So if people keep shopping for these slightly smaller products at the same price or even a higher price, the companies don't really have an incentive to change. And in fact, I'll give you one example. Kimberly-Clark, which makes a lot of home paper products, including Scott Toilet Paper and Kleenex. The CEO talked about price elasticity of demand, which is this economic term for how sensitive shoppers are to price increases. And he said, you can increase the price of toilet paper or shrink the size of a toilet paper. And that does not mean that people are going to use the bathroom less, right? So they will continue to buy toilet paper. More expensive toilet paper might not make you go to the bathroom less, right? So they will continue to buy toilet paper. More expensive toilet paper might not make you go to the bathroom less,

but if Oreos are more expensive, you can certainly cut back on the number of cookies you eat, right? Well, and that is exactly the question. Are people actually buying less Oreos? And that is exactly the thing that companies are keeping track of. And as long as they're seeing that people are not really choosing a different brand of cookie, but, you know, paying that shrinkflation price, again, there is very little incentive for them to act otherwise. We know that inflation seems to have peaked. So why are companies still doing this? It's unclear to me whether they're still shrinking products or they're just still reaping the benefits of having changed the products during the peak inflation. Some will say,

you know, some costs are still high. Cost of gas is still high. They're paying higher wages, that sort of thing. And again, if we keep shopping and don't seem to care as shoppers, then why change? Are we likely to see the pendulum swing back at any point? Is this going to reverse? Overall, when companies raise prices, they get kind of historically, they get kind of sticky. It's more common for companies to raise the price than to lower price. That said, companies do upsize all the time. The Bureau of Labor Statistics has data on this showing upsizing does happen.

Very often that happens by changing to family or mega sizes. And so I've been sort of trying to, having reported on shrinkflation so much, I've been trying to shop by comparing price per unit, like price per ounce or price per item in the package. And I do find myself now shopping more in bulk, which kind of ends up being the opposite of shrinkflation because I end up with more than I originally needed. NPR business correspondent Alina Selyuk, thank you. Thank you. This episode was produced by Megan Lim with audio engineering by Ted Meebane. It was edited by Emily Kopp and Courtney Dorning. Our executive producer is Sammy Yenigan.

It's Consider This from NPR. I'm Ari Shapiro.