The key point of shrinkflation is the ability of a company to adjust price when it increases without losing customers. But sometimes, shrinkflation does not only refer to the desire of having more profit but it could be something else. For instance, when cocoa materials increase, it will have an impact on many cocoa-related products, from candies to desserts and many other things. If a company increases the price of the product, which means it would be more expensive than before, it will lose customers. So, they use shrinkflation method to reduce the size of the content of the product to keep the price at the same level.
Companies having taken this strategy is M&Ms in the UK in 2017. The company shrank the content of the candy by 15%. Besides the rise of cocoa price, Walkers in 2021 also shrank two bags of crisps from 24 packs to keep the price at GBP 3.50. Actually, the UK government watches shrinkflation too. Based on the Office for National Statistics (ONS) around 2.529 products are in the form of shrinkflation. Meanwhile, only 614 product sizes are bigger.
ONS detects shrinkflation from the phenomenon of raw materials price increase like in sugar, jam, syrups, chocolate etc. Although the institution has indicated around 2.529 shrinkflation cases, it is still hard to detect shrinkflation. The other common example is in the tuna can that shrinks overtime. The size of tuna can shrink, but the price remains the same. Another way to note inflation is through CPI (Consumer Price Index). In CPI, there is a measurement of price change paid by the consumers for their goods.
CPI could also detect both inflation and deflation. Besides shrinkflation, there is also disinflation. As the opposite of shrinkflation, disinflation occurs when inflation slows but price increases.
