Shrinkflation refers to the phenomenon in which manufacturers reduce the amount or size of a product while the price remains the same or even increases. This often happens unobtrusively by changing the packaging only at a minimal rate, so that consumers hardly notice the difference. The aim is to indirectly pass on increased production costs or raw material prices to the customer,without confronting them with an obvious price increase.
Causes and economic backgrounds of shrinkflation
The term “shrinkflation” was first coined in the early 2000s, but gained importance in particular after the 2008 financial crisis and in times of rising commodity prices. Practice is not a new phenomenon, but has been found in various forms for decades, such as confectionery or household products. Companies see themselves through increasing competition andVolatile markets forced to make cost savings without negatively affecting their customers’ price perception. As a result, the reduction of the product quantity is often used as a clever strategy to secure margins and at the same time not to endanger sales.
Shadow inflation of shrinkflation
The effects of shrinkflation on purchasing power are subtle, but not to be underestimated. Although the nominal price of a product remains unchanged, the actual equivalent that citizens receive for their money is reduced. This leads to a creeping loss of purchasing power, since consumers unconsciously buy less goods for the same price. especially households with limitedIncome is feeling this development, as your budget is heavily burdened by these hidden price increases. In addition, the inconspicuous change in product size makes it difficult to consciously compare and recognize changes in price-performance ratio.
Shadow inflation of shrinkflation as a real tax increase
Shrinkflation seems in many ways like a hidden tax increase, as consumers effectively pay more for their money without being immediately perceived as a price increase. As the product quantity is reduced, the price per unit increases, which is equivalent to an additional financial burden – similar to a tax that makes consumption more expensive. This hidden additional burdenin particular, is disproportionately affected by low-income households, as they spend a larger proportion of their basic needs budget. At the same time, shrinkflation often eludes direct political control or regulation, since it is not fully recorded in the official price statistics and the extent of inflation can therefore also be underestimated. This makes it difficultIt makes decision-makers to take appropriate measures to relieve the burden on citizens and contributes to a silent burden on society.
Why Shadow Inflation is Much Higher Than Official Inflation?
The discrepancy between the official inflation rate and the actual burden of shrinkflation is primarily due to the fact that conventional measurement methods of inflation focus primarily on price changes per product unit, but often insufficiently take into account the change in product size or quantity. While statistical surveys capture price increases,The creeping shortage of the goods often goes undetected and leads to a systematic underestimation of the real loss of purchasing power. This creates shadow inflation, which is clearly noticeable for consumers, but is only marginally or not at all in official statistics. This hidden inflation increases the financial burden, especially in economictense times and makes it difficult to precisely assess the economic situation for both consumers and policy makers.
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