What is Shrinkflation?

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About Shrinkflation

It occurs when goods shrink in size but consumers pay the same price. It occurs when manufacturers downsize products to offset higher production costs but keep retail prices the same.
It is basically a form of hidden inflation.
Instead of increasing the price of a product, producers reduce the size of the product while maintaining the same price.
The absolute price of the product doesn’t go up, but the price per unit of weight or volume has increased.
Reasons: The reasons for shrinkflation are rising production costs and market competition.
Impacts:
- These are products sold quickly and at a relatively low cost. The FMCG industry is characterized by high-volume sales, quick inventory turnover, and various products catering to consumer needs.
- These goods include essential everyday items such as food and beverages, toiletries, cleaning supplies, and other low-cost household items.

Q1: What Is Inflation?

Inflation is a measure of how quickly prices are increasing over time. In other words, inflation measures how quickly money loses its purchasing power.

Source: Shrinkflation makes its way back into FMCG