Shrinkflation: What is it? How to avoid buying less and spending more.
The size of Milka bars has been decreasing, while the price has remained the same. There is a term for this phenomenon, and it is called “shrinkflation.” We’ll walk you through the process of understanding this phenomenon, as well as the steps you can take to prevent paying more for the same thing.
You may have noticed that the cost of your once-weekly food shopping trip has been steadily increasing. Who really is to blame for the recent spike in prices? In spite of the widespread consensus that a recession is imminent, inflation expectations continue to rise.
For example, Destatis predicted that inflation in Germany will reach +10.4% in October 2022, which would be the country’s highest rate of inflation since the country’s reunification in 1990. In the European Union (EU), the annual rate of inflation was 11.5% as of October 2022, according to Statista.
Since there’s more: in addition to growing inflation rates and an impending recession, shrinkflation is making it more costly for you to shop at the grocery store, which is a direct result of shrinkflation. In this section, we will discuss what shrinkflation is and what steps you may take to protect yourself from its negative effects.
What exactly is meant by the term “shrinkflation”?
The practice of lowering the size or quantity of things while maintaining (or even rising) pricing is referred to as shrinkflation. This term is a mix of the terms shrink and inflation and describes the process. Pippa Malmgren, a British economist, is credited with having first conceptualized the word in 2015.
Simply simply, shrinkflation refers to the process of receiving fewer units while continuing to pay the same amount as previously. Altering the chemical composition of a product or lowering its quality in order to produce it at a lower cost is another possibility.
Although this may not always be immediately visible when shopping, it does indicate that the price paid by the customer per unit of weight will rise.
Think back to the Milka bar you used to eat when you were a kid. Is it just your imagination, or does it seem far smaller than it did before? That’s what you get with shrinkflation.
The process of shrinking money supply
Before 2017, the weight of a bar of Milka Alpine Milk was 300 grams. Imagine if it used to cost one euro. Nevertheless, beginning in 2017, it became susceptible to shrinkflation. Even if the weight was lowered to 270g, you were still required to pay 1 euro for it.
This results in a 10% drop in weight for the same price, which ultimately implies that you are paying 10% more for the exact same chocolate bar.
Why do businesses resort to the practice of shrinkflation?
Companies are able to raise their profits while maintaining their sales volume and reduce their expenditures by decreasing the amount of their products while retaining the prior pricing. This strategy is used as an alternative to the practice of increasing prices in order to stay up with the rates of inflation.
Shrinkflation may not immediately add to the overall cost of the items in your grocery store basket; but, it will have an effect on the price per unit of weight, which in turn implies that you, as a customer, are receiving less value for the money you spend.
Is there a legal limit to shrinkage?
For the customer, shrinkflation might seem like falling into a trap, which is one reason why many organizations that defend consumers are wary of the practice. However, so long as certain parameters are met, engaging in such behavior is not illegal.
The Measurement and Calibration Act and the Act against Unfair Competition both include provisions in their respective sections 5 and 43(2) that are designed to safeguard consumers. According to these articles, deceptive packaging may involve transmitting false information to customers, which is against the law.
Brands should not imply that the package includes more items than it really does. This idea, however, will continue to be open to interpretation so long as the amount is properly labeled.
However, as a customer, you are not completely powerless. Check out our post on how to start saving money on your food shopping to learn a few useful recommendations, and keep reading to find out what you can do to prevent shrinkflation. Check out our article on how to start saving money on your grocery shopping to learn a few helpful tips.
How to avert the occurrence of shrinkflation
There will be periods when it will seem impossible to prevent shrinkflation. On the other hand, this is not always the case! The following advice will assist you in warding off the effects of shrinkflation and regaining value for the money you spend, regardless of whether or not you adhere to a strict financial plan.
Let’s begin with the fundamentals, shall we?
Determine the cost based on the unit of weight
You probably wouldn’t know how much your Milka bar weighed in 2015, and you probably wouldn’t know if it became smaller simply by glancing at it on the shelves of the store, particularly if the price remained the same. Especially if the price remained the same.
If you want to avoid making judgments based just on price, you should instead focus on the price per unit of weight. In Germany, this information is often located underneath the ordinary price tag, in smaller figures that typically state things like “100g = €0.56” or “1 kilogram = €2.05.”
You won’t have to depend on your memory to determine whether or not a product has been influenced by shrinkflation since the price that you pay per unit of weight will reveal which things are genuinely more affordable.
Investigate the possibility of using non-branded or generic alternatives.
Consumers are more likely to notice the effects of price deflation on convenience goods such as snacks, frozen foods, bread and pastries, meat, and pantry products such as wheat and beans, according to a survey conducted by Morning Consult.
And what actions are they doing in response to it?
49% of customers choose to buy a product from a different brand.
48% of respondents said that they went for a generic brand.
You may participate in this activity as well.
Look for brands that are already generic or heavily discounted to avoid being taken advantage of by shrinkflation. Both “Gut und Günstig” (Edeka) and “JA!” are the names given to these generic products in Germany (Rewe). You might also go to cheap supermarkets like Aldi, Lidl, Netto, or Penny if you want to save some money on your food shopping. These shops are all located in Europe.
Although this does not imply that generic alternatives or discount stores are immune to the effects of shrinkflation, the fact that they are often more affordable means that you are likely already spending less money.
Buy in bulk
According to the same research conducted by Morning Consult, 33 percent of customers choose to make bulk purchases in order to protect themselves from the effects of shrinkflation. It is important to question yourself: Is it something you are also capable of doing?
In general, purchasing in bulk eliminates the need for superfluous packaging, which results in a reduction in the price that must be charged for the items. You will often have some say in the quantity that you are purchasing as well, which makes it simpler for you to exercise financial restraint.
Stores such as Selgros, Handelshof, Metro, and Globus are examples of bulk retailers in Germany. However, in order to participate in the majority of them, you will need to provide both a membership card and a business tax ID.
