Shrinkflation Is A Big Reason Why Toilet Paper, Snacks More Expensive Now: Study

Companies are effectively raising their prices by stealthily charging the same amount of money, or even more, for ever-smaller portions and its been a big driver of inflation in many products in the past few years, according to a new study by a group of progressive economists.

The phenomenon, dubbed shrinkflation, is gaining more notice even as conventional inflation has come down appreciably from the heights seen in 2022 and 2023. Sen. Bob Casey (D-Pa.) has a bill aimed at fighting shrinkflation , and President Joe Biden released a Super Bowl YouTube ad calling on companies to put a stop to this.

Groundwork Collaborative, a group of left-leaning economists, issued a study Wednesday finding that shrinkflation played a substantial role in inflation between the years 2019, before the COVID-19 pandemic began, and 2023, after most businesses had returned to normal.

While shrinkflation is not new, it is arguably the most deceptive pricing practice companies use and has come under renewed scrutiny as Americans face grocery prices 25% higher than prior to the pandemic, Lindsay Owens, executive director for Groundwork and the author of the study, wrote. We find that as much as 10% of inflation in key product categories can be attributed to shrinkflation.

Owens cited tracking by the Bureau of Labor Statistics for the 10% figure. The BLS checks the prices on thousands of items each month to compile its Consumer Price Index, the most widely known measure of the pace of price increases, or inflation.

While most of the CPI simply consists of tracking price movements for specific items, the bureau also tracks when companies change their formulations or packaging, to ensure it does not miss the inflation that occurs when a company, for example, charges the same price for six-pack of soda but reduces the size of each can by half an ounce.

Citing BLS data, the Groundwork study said that household paper products, a category that would include toilet paper and paper towels, had 10.3% of its nearly 35% price increase between 2019 and 2023 come from shrinkflation.

Another category, snacks, saw 9.8% of its inflation over that period attributable to shrinkflation.

The report noted other categories where shrinkflation contributed significantly to overall inflation: household cleaning products (7.3% due to shrinkflation), coffee (7.2%) and candy and chewing gum (7%).

The report also included examples of companies using shrinkflation and related strategies to boost corporate bottom lines.

In one instance, the CEO of a major toilet paper maker was reported to have said on a quarterly financial reporting call that consumers were unlikely to change their buying habits even if they realized they were paying more for less.

If the price goes up on bath tissue, generally doesnt mean youre going to use the bathroom less, right? And so, I think we do operate in essential categories that have less elasticity, the CEO said, according to the report.