Shrinkflation

Imagine buying your usual bag of potato chips and noticing that it feels lighter, although the price has not changed. You have not imagined it. When a company reduces the amount in a package but keeps the price the same, economists call it shrinkflation.

Companies usually do this when their own costs rise. Raising the price is the obvious response, but shoppers notice a higher number on the shelf immediately. A slightly smaller package is far less visible, especially when the box or bag stays the same size and only its contents change.

The practice is real, but it is easy to exaggerate how common it is. In 2017, the United Kingdom's Office for National Statistics examined products in its price data between 2015 and 2017. It found 206 products that had become smaller and 79 that had become larger. Most of the changes involved food, and the prices of the shrinking products usually stayed the same.

Shrinkflation does not escape official inflation figures. Statistical agencies record prices per unit, such as per gram, so a smaller package sold at the same price counts as a price increase. For shoppers, the practical lesson is similar: comparing the price per unit, not the price on the package, shows what things really cost.