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Paying More for Less: What is 'Shrinkflation?'

June 28, 2022
8 Advanced Economy & Business

Exercise 1
Vocabulary

shrink Verb

/ʃrɪŋk/ to become smaller in size, amount, etc.

I think the dryer shrunk my jeans!

inflation Noun

/ɪnˈfleɪʃən/

an increase in the prices of goods and services in a particular country that makes its currency less
valuable

Wages have not kept up with rising inflation over the past few decades.

appeal Verb

/əˈpiːl/ to be attractive, interesting or desirable

"The Hobbit" is popular because it appeals to readers of all ages.

straightforward Adjective

/ˌstreɪtˈfɔːrwərd/ (of a person) honest and direct

Amanda is very straightforward and easy to work with.

reverse Verb

/rɪˈvərs/ to change something so that it is the opposite of what it was before

You can't reverse the aging process, but you can slow it down.

supply chain Noun

/səˈplaɪ tʃeɪn/

the series of processes and organizations involved in producing and transporting products to
where they are used or purchased

The COVID-19 pandemic caused a major disruption to global supply chains.

Exercise 2
Article

Paying More for Less: What is 'Shrinkflation?'

From toilet paper to yogurt and coffee, manufacturers are shrinking package sizes without
lowering prices. This is called "shrinkflation," and it's happening all over the world.

In the US, for example, a small box of Kleenex now has 60 tissues; a few months ago, it had
65. In the UK, Nestle reduced its Nescafe Azera Americano coffee tins from 100 grams to 90
grams. In India, a bar of Vim soap has shrunk from 155 grams to 135 grams.

Shrinkflation isn't new. But it increases in times of high inflation as companies struggle with
rising costs for materials, packaging, labor and transportation.

Global consumer price inflation was up an estimated 7% in May, a rate that will likely
continue until September, according to S&P Global.

Edgar Dworsky, who documents shrinkflation on his Consumer World website, said
shrinkflation appeals to manufacturers because they know customers will notice price
increases but not changes in weight or small details.

Companies also do things that draw attention away from the size reduction, like putting
bright new labels on smaller packages.

Some companies are straightforward about the changes. In Japan, snack company Calbee
Inc. announced 10% weight reductions — and 10% price increases — for many of its
products. The company blamed a sharp rise in the cost of materials.

In India, "down-switching" — another word for shrinkflation — is mostly done in rural areas,
where people are poorer, said Byas Anand, who works for Dabur India, a consumer care and
food business. In cities, companies simply increase the prices.

Sometimes the trend can reverse. As inflation decreases, manufacturers might lower their
prices because of competition. But Dworsky says once a product has gotten smaller, it often
stays that way, and "upsizing" is rare.
Hitendra Chaturvedi, a professor of supply chain management at Arizona State University's
WP Carey School of Business, said he has no doubt many companies are struggling with
labor shortages and higher material costs. But in some cases, companies' profits are also
increasing massively, which he said is troubling.

Exercise 3
Discussion
1. What are your thoughts on shrinkflation?

2. Have you noticed any products that are smaller now than they used to be?

3. What products have seen the biggest price increases in your country recently?

4. Have your shopping habits changed since the start of the pandemic?

5. When was the last time your country went through a period of high inflation?
Exercise 4
Further Discussion

1. What areas of your country's economy did COVID-19 impact the most?

2. Has your company made any changes to its products or services in recent months?

3. How has the industry you work in been affected by the pandemic?

4. What industries in your country do you imagine benefitted from the pandemic?

5. When do you expect the economic impacts of COVID-19 to subside?

Parts of this lesson are based on:

An article by The Associated Press. All rights reserved.

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