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9 Jun, 2022 11:27

‘Shrinkflation’ hits consumers worldwide – AP

Companies say they are forced to downsize their products due to rising commodity, energy and labor costs
‘Shrinkflation’ hits consumers worldwide – AP

Global manufacturers have been quietly shrinking their products without lowering prices, the Associated Press reported on Wednesday. So-called “shrinkflation,” occurs when companies pass their costs on to customers, and the news agency claims it's accelerating worldwide. 

In the US, a small box of Kleenex now has 60 tissues while a few months ago it had 65. The size of yogurts has also shrunk. In Britain, Nestle reduced its Nescafe Azera Americano coffee tins from 100 grams to 90 grams. In India, a bar of Vim dish soap has contracted from 155 grams to 135 grams.

“It comes in waves. We happen to be in a tidal wave at the moment because of inflation,” consumer advocate and former assistant attorney general in Massachusetts Edgar Dworsky told AP. He has documented shrinkflation on his Consumer World website for decades.

Dworsky began noticing smaller boxes in the cereal aisle last fall and says shrinkflation has ballooned since then. He claims the practice appeals to manufacturers because they know customers will notice price increases but won’t keep track of net weights or small details, like the number of sheets on a roll of toilet paper.

According to him, companies also employ other tricks to draw attention away from downsizing, like marking smaller packages with bright new labels that draw shoppers’ eyes.

Some companies have been straightforward about the changes, blaming a sharp rise in the cost of raw materials. In Japan snack maker Calbee announced 10% weight reductions — and 10% price increases — for many of its products in May, including veggie chips and crispy edamame.

Domino’s Pizza said in January it was shrinking the size of its 10-piece chicken wings to eight pieces for the same $7.99 carryout price. The company explained the move with the rising cost of chicken.

There’s no doubt that many companies are struggling with labor shortages and higher raw material costs, says Hitendra Chaturvedi, a professor of supply chain management at Arizona State University’s W.P. Carey School of Business. He, however, added, as quoted by AP: “I’m not saying they’re profiteering, but it smells like it. Are we using supply constraints as a weapon to make more money?”

According to S&P Global, world consumer price inflation was up an estimated 7% in May, a pace that will likely continue through September.

For more stories on economy & finance visit RT's business section

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