The shrinkflation myth
Fin24

The shrinkflation myth

2014-02-11 07:23

Port Elizabeth - Something is wrong. You seem to crave another bite of your favourite chocolate bar, and the kids seem to use more toilet paper than before.

And is it just my imagination, or is the jar of peanut butter smaller than it used to be?

This is nothing new, but somebody recently put a catchy name to it and everybody is starting to talk about shrinkflation. Shrinkflation is the phenomenon where products are getting smaller, but the price consumers pay stays the same.

It seems to be more prevalent or noticeable with food or snacks. The most extreme example popped up a few years ago when shops started to sell bite-sized chocolate bars, one of which was a small chocolate with only two blocks.

Consumers also need to check other products when they stand in front of a shelf. The standard packaging for a bag of charcoal or briquettes used to be 5 kg, but now some packets contain only 4 kg which costs just a fraction less than the competitor's 5 kg. Some brands of motor oil now sell in 4 litre containers instead of the common 5 litres.

Consumers see this as a devious way to hide price increases, and could even feel that they are being cheated. Even retail chains are cautious to comment on the trend and referred Fin24’s queries to suppliers, saying they are unable to answer questions about individual producers’ packaging strategies.

Some people also think that shrinkflation hides the true inflation rate, and that the official inflation figures are lower than they are in actual fact.

This is not the case. Statistics SA takes into account any change in the size or quantity of products when calculating the inflation rate “when the size of the replacement item differs from that of the previously priced item”, according to its official procedure.

This is in line with international practice, and the calculation of the inflation rate is adjusted whenever “weight, dimensions or purity of composition changes”.

This is quite simple to achieve. StatsSA uses 10 different baskets of products and services that households typically buy. These baskets are selected on the basis of its Income and Expenditure Survey conducted every five years. The last survey included 31 500 households around SA.

Each basket contains about 350 items, for which prices are collected from retailers every month. If any of the products changes in size, packaging or volume, StatsSA would scale the price of the new product by the ratio of the change in quantity.

The official inflation rate will thus be adjusted for the smaller packaging. In short, shrinkflation does not really exist.

A more interesting challenge when calculating the inflation rate is dealing with changes in quality, which are more difficult to measure. StatsSA started to take changes in quality into consideration in 2013.

It uses an internationally accredited method to attempt to estimate the market value of any difference in quality, and adjust the consumer price index accordingly. The idea is to try to measure an improvement in products and thus an improvement of our standard of living, and relate this to price increases.

If one does not consider improvement in quality, the official inflation rate will peg inflation higher than it actually is. We can argue that this has been the case since SA authorities started to calculate the inflation rate nearly 100 years ago - in 1917.

 - Fin24

Do you agree that products are getting smaller while the price you pay stays the same? Give us your take and send us your pics and you could get published.

*After chasing money on the JSE for 15 years, Adriaan Kruger is now living a relaxed lifestyle in Wilderness and lectures economics part-time at Nelson Mandela Metropolitan University.



   
 

Comments
  • Vuyo Ntsinde - 2014-02-11 10:43

    Counsumers should accept responsibility for this. If thery learn to use arithmetic and calculate the price per unit instead of the total prices, then they can calculate which of the two products is cheaper, whether a 5 litre oil or a 4 litre oil.

      Emelia Lawrenz Stanton - 2014-02-11 14:08

      Trouble is a lot of folks in our society still cannot do arithmetic.

      Marius Jacobs - 2014-02-12 21:55

      Has anyone noticed that certain pringles cans contain smaller pringles? One week they the big, normal size ones, then the next week you buy, they the smaller ones?

      NoeNoe - 2014-02-12 23:27

      @Marius - If you can afford to buy luxury items like Pringles then you are extremely fortunate.

  • Alan Gernet - 2014-02-11 10:53

    well fact is - consumers do get taken for a ride with similar looking, but smaller products. Sure - we learn in time to look out for the smaller tomamto sauce bottles, and the 4l of paint tins etc, but we all got hoodwinked somewhere along the way by paying for what we assumed were bigber/more products.

  • Pierre Potgieter - 2014-02-11 12:27

    Who has come across the hamburger buns, that is more a shell with only a few strands of dough inside. Compressed air also has weight, that is why chips packets can have less chips and more air, for the same weight. Chocolate slabs are definitely getting smaller. I had Stoney ginger beer for the first time in a long while, and the taste has changed for the worst, but that could be a personal thing, I admit. There are many more examples though.

  • Magezi Mhlengwe - 2014-02-12 10:57

    "Shrinkflation is the phenomenon where products are getting smaller, but the price consumers pay stays the same"...this is incorrect in some cases I personally encountered: the product was smaller by 50ml yet the price has actually gone up. This was a case for All Gold tomato sauce at P&P

  • Sisie Indola - 2014-02-12 13:15

    If you are only noticing this now - i feel so sorry for you. This has been going on for years. And please don't forget taking the product off the shelves for 3 maybe 6 months then bring it back in new wrapping and higher prices. Total rip off!

  • Michelle Nichol - 2014-02-12 14:44

    Lots of that happening... Cold-drink cans are 330ml instead of 340ml, a slab of chocolate is now 80g instead of 100g, All-Gold tomato sce is 700ml not 750, a box of tissues only has 180 in them not 200... take a look at your packaging!! It's all shrinking but a few grams or mls at the higher price

  • Sisie Indola - 2014-02-12 15:16

    Oh and please don't forget the biggest rip off of all. The Plastic bag Tax which is actually 11c now - stand corrected. It has never been collected (stand to be corrected there as well). Supermarkets charge up to 60c on a plastic bag. So in fact they a ripping the consumers off by 49c. So when you actually hear of these supermarkets financials at year end and they have made 30% profit, probably about 10% of that profit comes from this rip off if not more. Please don't come and tell me that they have to still have them made and logo's put on - that is taken into the cost of the products/goods you are buying. Same goes for pilfering price is worked into the goods. And there is no better place to shop - they are all in cahoots where pricing is concerned - and when they have sales, whether 50% or 75% off know that they are still making 100% profit on those goods.

      NoeNoe - 2014-02-12 23:37

      @Sisie - I reuse my shopping bags until they are in danger of tearing and then use them again to line the small refuse bucket in the kitchen. If I buy 10 bags a year it is a lot. I have also been using denim bags my sister made for the last 8-9 years and they are still going strong. Please do not complain about being ripped off if you are too lazy to do the same.

      Emelia Lawrenz Stanton - 2014-02-19 12:13

      Noenoe, I agree. I buy almost no new bags. The tax has served an important purpose and its really working. Less bags flapping around the countryside. And that means less cattle dying as a result of their intestines being blocked up with plastic bags. We saw it and it must be a most terrible way to die!!!

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