If you’re trying to figure out why your dollars aren’t going as far as they used to, don’t blame rising prices – at least, not entirely. The culprit might be prices that haven’t changed.
Odds are that if the price of an item hasn’t budged, the quantity or quality of that item has. This is what’s known as shrinkflation. It’s a sneaky tactic brands use to pass on price increases to customers without them noticing that can take all sorts of forms, from more air in chip bags and fewer ounces in beverages to fewer sheets on a roll of paper towels.
It may not sound like much (what difference does an ounce or two actually make?) but when hundreds of products and services are secretly being downsized, the end result can make shrinkflation particularly devious on your budget for two big reasons.
Even if you’re not the main shopper for your household, you probably have a general idea of what a reasonable price is for things like frozen pizzas, toilet paper, or a tube of toothpaste. Whether they’re things you buy regularly or know from glancing at prices in sales flyers, if prices were to increase, there’s a good chance you’d notice.
And when you noticed, one of two things would happen. You might buy that item with the new higher price anyway. Or, you might decide to modify your shopping behavior and buy that item less frequently or switch to a cheaper alternative. Either way, you had an expectation of what you were going to pay and that served as a baseline to judge actual prices against.
With shrinkflation, the most obvious sign that things have gotten more expensive, price, hasn’t changed. The only way a shopper would realize they were getting less is if they had memorized the quantity of the items they usually purchase. You could probably rattle off the price of butter five years ago, but could you do the same if asked how many ounces of butter were in that package? Probably not.
It’s not shoppers’ fault for not noticing either. Brands usually mask these size changes behind altered packaging. Shrinkage often occurs simultaneously with new shapes, dimensions, and colors under the guise of a rebrand or redesign.
Since financial alarm bells don’t go off when prices stay the same, shoppers will continue to buy the now more expensive product. But this leads to another issue: The smaller quantities caused by shrinkflation mean fewer bites, wipes, and uses out of every purchase. Therefore, those shrunken goods will need to be replenished more frequently.
Say you were running through cereal faster than you usually do. You’d probably think it was because perhaps your servings were larger than you realized. It might never occur to you that the brand had anything to do with it. So what do you do? You run to the store and pick up another box from the same brand… and the cycle continues.
Shoppers are getting less, not realizing it, and brands want to keep it that way. The best way to ensure you’re always getting the best value is to start looking at a little something called ‘unit pricing’ when shopping. It’s a great comparative tool to use when there’s a variety of products all with different prices and different product weights.
The higher the unit price, the more expensive a product is per ounce or gram. Use unit price to make a quick apples-to-apples comparison without having to pull out a calculator and make financially smarter choices at the grocery store.