Shrinkflation

In News

Companies are resorting to the strategy of Shrinkflation to reduce the impact of rising input costs.

About

• Meaning:
  • Downsizing a product while keeping its price the same is called “shrinkflation”
  • It is a combination of the words shrink and inflation.
• Ways of shrinking:
  • Reducing size,
  • Reducing quantity,
  • Reformulating the products, or
  • Removing ingredients from a product while maintaining the same price.
• Causes of Shrinkflation
  • Increased Costs making it more expensive for companies to produce their products.
  • Intense competition in the market compelling companies to maintain or reduce their prices.
  • Changing demands from customers which may force companies to reformulate their products which, in turn, can lead to size changes.
• Benefits:
  • Maintained profits: Downsizing a product reduces costs for manufacturers.
  • More Affordability for customers.
• Disadvantages:
  • It is an unfair practice for consumers.
  • Loss of trust if companies do not properly communicate with their consumers.

Source: WEF