Shrinkflation Is an Economic Monster Worth Watching
When inflation strikes, retailers have a proven strategy to pass the costs on to consumers.
Honey, they shrunk the candy bars.
Illustration: Lara Williams/Getty Images
How will we know if inflation is making a comeback? Most economists are focused on the price of commodities, wages, and other basic goods and services. But history suggests they might want to keep an eye on a related phenomenon that often escapes notice: so-called “shrinkflation.”
This practice became increasingly common in the 1960s and 1970s, when manufacturers confronting runaway inflation tweaked packaging rather than hike prices. At first, the practice attracted relatively little notice: It’s difficult to discern changes in unit prices when they’re camouflaged in different-looking boxes and bags.