How Scamming Consumers Became Normalised
TL;DR
While shrinkflation—reducing product quantities while keeping prices stable—has existed for 75 years, corporations are now increasingly exploiting inflation as cover to expand profit margins far beyond input cost increases, with data showing corporate profits drove 53% of 2023 inflation compared to just 11% over the prior four decades.
🧠 The Psychology of Shrinkflation 3 insights
Just Noticeable Difference hides size reductions
According to Weber's law, products must change by approximately 13% in weight for humans to physically perceive the difference, allowing companies to gradually reduce sizes without triggering consumer awareness.
Shrinkflation accelerated aggressively post-2020
While the practice dates back 75 years as a response to supply chain pressures, recent examples show dramatic jumps like Charmin reducing sheets per roll by over 65% since the 1960s and Bounty cutting sheets from 135 to 123.
Recent product downsizing exceeds inflation rates
Products like Simply Orange juice dropped from 52 oz to 46 oz and Crystal Light from 6 to 4 packets, with reduction rates surpassing actual inflation metrics.
💸 Greedflation: Profits Disguised as Inflation 3 insights
Input costs rose 1% while prices increased 3.4%
According to the Groundwork Collaborative, 2024 data shows producer input costs rose only 1% in the US, yet consumer prices rose 3.4%, indicating 2.4% of price hikes served purely to boost profit margins.
Corporate profits now drive majority of inflation
Corporate profits accounted for 53% of inflation during 2023's second and third quarters, a dramatic shift from the previous 40-year average where profits contributed just 11% of price growth.
Global pattern of excess profit taking
The UK saw average profit margins 30% above pre-pandemic levels across 17,000 firms, Australia recorded $100 billion in excess profits from December 2022 to June 2023, and Canadian after-tax profits were 55% higher than 2019 levels.
⚖️ Skimpflation and Regulatory Responses 3 insights
Skimpflation cuts ingredient quality covertly
Manufacturers increasingly substitute cheaper ingredients, exemplified by Coca-Cola's gradual switch from raw sugar to high-fructose corn syrup over four years, fundamentally altering product composition without reducing size.
Governments implement labeling and fining mechanisms
South Korea now fines companies approximately $7,000 for failing to display shrinkflation labels for three months, while Australia is reviewing unit pricing laws and threatening fines for misleading package sizes.
Consumer defense requires unit price vigilance
Experts recommend comparing price-per-serving rather than total package cost, checking unit pricing labels, stocking up on discontinued older product sizes, and using loyalty programs to mitigate the impact of downsizing.
Bottom Line
Always calculate and compare the unit price or price-per-serving rather than the total package cost, and be willing to switch brands or stop purchasing when prices exceed justifiable inflation to force corporations to backpedal on excessive shrinkflation.
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