[Shrinkflation: The Secret of Invisible Price Increases]

“The price is the same, so why is my wallet getting lighter?” This is a question many consumers have. The visible price hasn't changed, but familiar snack bags have become smaller and drink bottles have become slimmer. This phenomenon is called shrinkflation in economic terms. In this article, we will provide an in-depth analysis of the concept and causes of shrinkflation, and present smart countermeasures that we as consumers can take.

Shrinkflation: The Invisible Enemy of Consumers - Same Price, Less Product

1. The Concept of Shrinkflation

Shrinkflation is a portmanteau of Shrink and Inflation, referring to the strategy of keeping the price the same while reducing the volume, size, or quantity of a product, thereby effectively raising the price. It is also called 'invisible inflation' or 'shadow inflation' because it is not well-reflected in the Consumer Price Index (CPI). This phenomenon is primarily used as a strategy for companies to protect their profitability while avoiding consumer resistance to price hikes.

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2. Main Causes of Shrinkflation

Shrinkflation occurs due to various economic pressures faced by companies. The biggest causes are rising raw material prices and increased labor costs.

• Rising Raw Material Prices: When the price of raw materials, which are the main ingredients of a product, increases, companies face a greater production cost burden. For example, if the price of milk or flour soars, bread or snack manufacturers may choose to reduce the product volume to meet their production costs.
• Increased Distribution and Logistics Costs: If transportation costs increase due to rising energy prices or poor logistics efficiency, this is also reflected in the final price of the product. Companies try to offset these costs by reducing the content instead of changing the price tag.
• Increased Labor Costs: When labor costs, such as the minimum wage, continue to rise, companies choose shrinkflation to save costs while maintaining productivity. This has the effect of avoiding the direct pressure of rising prices felt by consumers.

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3. Real-life Examples and Consumer Experiences

We can easily find examples of shrinkflation in our daily lives. Common examples include chocolate bars becoming smaller than before, a noticeable decrease in the content of a bag of chips, or a reduction in the number of sheets in a roll of toilet paper. These changes are usually subtle, making it difficult for consumers to notice them immediately. While this corporate strategy may minimize consumer complaints in the short term, it can make consumers feel betrayed and damage brand trust in the long run.

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4. Smart Countermeasures for Consumers

In the era of shrinkflation, consumers need to make a few efforts to respond smartly.

• Compare Price per Unit (e.g., price per gram): It's important to develop a habit of carefully checking the product volume and comparing the price per gram (or per piece) rather than just looking at the price tag.
• Utilize Private Brand (PB) Products: Private brand products from large supermarkets are often cheaper as they reduce intermediate distribution stages. They can be used as an alternative less affected by shrinkflation.
• Demand Corporate Transparency: It is also important for consumers to raise awareness of shrinkflation and voice their demands for transparent disclosure from companies regarding changes in product volume. Government agencies, such as the Fair Trade Commission, should also strengthen their monitoring of such practices.

The content of this blog is for reference in investment judgments only, and investment decisions should be made under individual judgment and responsibility. Under no circumstances can the information on this blog be used as evidence for legal liability for investment outcomes.