Shrinkflation
- Shrink inflation - when a product downsizes its quantity while keeping the price the same.
- Eg, reducing the scoops of ice cream in a container or reducing the number of chips in a packet while keeping the price the same. .
Methods of shrinkflation
- Reducing the weight
- Reformulating or removing ingredients while maintaining its price.
- Eg, Cadbury Dairy Milk stopped using foil which it used to prevent chocolate from losing its quality and flavour in order to save expense.
Impact on consumers
- Deceives consumers into believing that the brands they buy are not affected by inflation.
- The container sizes are reduced by very small amounts, saving manufacturers more money in the long run.
- Can lead to a loss of trust if companies fail to properly communicate with them.
- Can cause customer frustration and deterioration of consumer sentiment towards a producer’s brand.
Implications
- Due to shrinkflation, it is more difficult to accurately measure price changes or inflation.
- Price points become misleading when the basket of goods cannot always be measured by considering the product size.
- Tackling shrinkflation means tackling inflation.
Conclusion
- India needs a mix of macroeconomic policies to manage demand and supply, as well as address structural rigidities in the economy.
- In India, the Right to Information is a consumer right.
- The consumer has the right to know the quality, quantity, potency, purity, standard, and price of goods.
- So, the Central Consumer Protection Authority needs to bring some guidelines to inform consumers when the weight of a product is reduced, instead of letting consumers be fooled by companies.
Prelims Takeaway
- Central Consumer Protection Authority
- Shrinkflation