No, you’re not going crazy: your favorite snacks and household products really are diminishing in both size and quality. The new phenomena of “shrinkflation” and “skimpflation” are very real, and they are becoming huge problems for millions of working Americans.
Although inflation has cooled considerably since its peak in 2021 and 2022, prices are still ticking up at a faster rate than they were before the COVID pandemic. We have not been shy about pointing the finger squarely at corporations and their price-gouging strategies as the primary cause of the ongoing inflation crisis. Corporations did face heightened production costs because of the war in Ukraine and pandemic-induced supply chain snarls, but they used those things as excuses to raise prices on their products above and beyond what would be necessary to make up for those costs. Moreover, they continue to openly keep prices artificially high with no other motive besides profit-seeking.
New findings from our allies at Groundwork Collaborative offer support for the corporate price-gouging argument we’ve been making over the last two years. Their report – Inflation Revelation: How Outsized Corporate Profits Drive Rising Costs – found that 53% of the rise in inflation between April and September of 2023 could be attributed to fatter corporate profits. The report emphasizes that production costs are now rising much slower than inflation and are actually decreasing for a number of key commodities and services, leaving corporations with little excuse to continue raising prices. In light of these findings, it should come as no surprise that corporate profits as a share of national income have ballooned 29% since the pandemic and are hovering at an all-time high. To add insult to injury, corporate executives continue to openly brag about their price-gouging strategies on earnings calls.
It’s clear that corporations aren’t afraid to blatantly inflate their prices to pad their bottom lines, but lately, they’ve also engaged in sneakier tactics. To squeeze as much profit from consumers as possible, they have minted two new strategies aptly called shrinkflation and skimpflation. Shrinkflation is a practice in which companies shrink the size of their products but keep the price the same, which reduces the purchasing power of consumers. During the Super Bowl earlier this month, President Biden took to social media to decry the decrease in size of some of his favorite game day snacks and draw attention to the problem of shrinkflation. Meanwhile, skimpflation is shrinkflation’s close cousin, but has to do with quality instead of quantity. Skimpflation involves companies using cheaper, lower-quality ingredients to make their products for less or, in the case of the service industry, skimping on staffing and amenities.
In December, Senator Bob Casey’s (D-PA) office published a report highlighting some of the top products most impacted by shrinkflation. According to the report, household paper products like toilet paper and paper towels were the most affected. Popular toilet paper brands like Charmin Ultra Soft and Cottonelle now offer fewer sheets in their rolls: Charmin Ultra Soft Mega rolls decreased from 264 sheets in a roll to 244 while Cottonelle shrunk from 340 sheets to 312. Across the board, between January 2019 and October 2023, household paper products have become 34.9% more expensive per unit, and no less than 10.3% of this increase is due to shrinkflation. Snacks were the second most affected product category. Super Bowl favorites like Doritos, Wheat Thins, and Oreos have all shrunk in weight as the boxes/bags have gotten smaller and offer fewer goodies. Across the board, snacks have become 26.4% more expensive over the last five years, with 9.8% thanks to shrinkflation.
Dollar stores like Dollar General and Dollar Tree have recently been exposed as some of the worst offenders when it comes to shrinkflation. These chains are well-known for offering low prices on household essentials, but when you actually dig deeper, they end up charging more per unit than other retailers by engaging in shrinkflation. This is particularly egregious given that these retailers have over 35,000 locations combined – more than five times as many stores as Target and Walmart – and predominantly serve low-income families, who often don’t have the option to travel further to look for better bargains.
Skimpflation, on the other hand, is harder to measure than shrinkflation, but it is no less harmful. Consumers have noticed how their beloved snacks and treats – from Coca-Cola bottles, to Dairy Milk chocolate bars, to Twix candy bars, to Breyers ice cream – don’t taste as good as they once did. And they’re not imagining it – in a survey of over 300 food and beverage brands, 37% of companies said that they had changed the recipes of more than 20 of their products, while 25% said they had changed between 6 and 20 recipes to involve cheaper ingredients. While it might be easy to shrug this off as a sad inconvenience to nostalgic consumers, it’s anything but: research suggests that the cheaper, lower quality ingredients that companies are now increasingly using to make their food products are far less healthy and linked to medical conditions like heart disease, diabetes, and cancer.
Companies engaging in shrinkflation and skimpflation are quick to blame inflation and increased production costs for their practices, arguing that consumers would rather have fewer chips in their bags or less tasty chips than have to pay a higher price for those chips. This justification is, to put it mildly, nonsense.
For one thing, as we mentioned, production costs for most companies have cooled, so there is no reason for companies to “pass on” those costs to consumers. But even when production costs were sky-high at the peak of the inflation crisis, there was still no reason for companies to engage in these sorts of tactics. As we’ve discussed before, if companies faced meaningful competition, they would have absorbed any increased production costs and kept their products’ prices as low as possible – and, naturally, their quality as high as possible – to attract customers. That’s sadly not the case in America today, as most industries are dominated by just a handful of players, which makes it easy for them to tacitly work together to hike prices and shrink product quantity and quality without any real repercussions.
We know that public awareness campaigns – translation: PR disasters – work when it comes to getting corporations to do the right thing. Two years ago, when Conagra engaged in skimpflation by reducing the vegetable oil content in its Smart Balance margarine by 40%, there was such a huge backlash from the public that the company reversed course and brought back its old recipe. But we can’t rely on PR disasters to emerge every time a corporation acts irresponsibly. Congress has the authority to protect consumers and ensure competitive markets, and it should use it. Among other things, they can follow the example of other countries like the UK, Portugal, and Italy and enact windfall profits taxes on highly profitable industries; work to strengthen antitrust laws to stimulate competition; and investigate corporate profiteering to its full extent. At a minimum, Congress should use its subpoena power to demand answers from corporate executives on their pricing strategies.
It’s hard to keep track of all the different kinds of “flation” these days. The situation has become so bad that Dictionary.com had to officially add a definition for “greedflation” this year. But it’s important to remember that we are not powerless: Congress can and should take action before the English language sees yet another new term to describe corporate misdeeds.
