{"id":169,"date":"2025-06-20T08:08:54","date_gmt":"2025-06-20T12:08:54","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=169"},"modified":"2025-06-20T08:08:54","modified_gmt":"2025-06-20T12:08:54","slug":"shrinking-goods-growing-prices-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/06\/20\/shrinking-goods-growing-prices-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Shrinking Goods, Growing Prices \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"

During times of inflation, U.S. Presidents have berated firms for daring to raise prices, even though government policies caused the inflation. Rather than raising prices, some manufacturers reduce product sizes or quantities while maintaining the same money price, effectively increasing the cost per unit. This strategy is prevalent in the food and household goods sectors, where consumers are apparently more sensitive to price changes than to size reductions. This <\/span>strategy is often called shrinkflation<\/span><\/a>.\u00a0<\/span>\u00a0<\/span><\/p>\n

For example, <\/span>in 2021, General Mills reduced the size of its family-sized cereal boxes from 19.3 oz to 18.1 oz (a 6.2% reduction), and Walmart reduced the Great Value Paper Towels sheet count from 168 sheets per roll to 120 (a 28.6% reduction). In 2008, Skippy reduced the size of its peanut butter containers from 18 oz to 15.3 oz (a 15% reduction). Most reductions in size are not announced.<\/span><\/a> However, in 2021, <\/span>Tillamok announced that it would reduce the size of the ice cream cartons from 56 oz to 48 oz<\/span><\/a> (a 14.3% reduction).\u00a0<\/span>\u00a0<\/span><\/p>\n

The U.S. Bureau of Labor Statistics (BLS) writes that it \u201c<\/span>strives to capture product upsizing and downsizing in the CPI in a timely manner.\u201d And that, \u201cThe effective price changes due to size changes are reflected in the CPI.<\/span><\/a>\u201d \u201cIndexes that experienced the largest price increase due to downsizing were baby food (+2.81 percent); snacks (+2.64 percent); fresh biscuits, rolls, muffins (+1.59 percent); candy and chewing gum (+1.35 percent), and household paper products (+1.30 percent). Snacks, such as potato chips, saw frequent downsizing of their snack packs from 4.5 oz. to 4.25 oz. and an 8 oz. bag declining to 7.5 oz.\u201d Because only a few prices in the CPI are downsized each year (and some are upsized), <\/span>the BLS states that the overall impact on the CPI is minimal, an average annual 0.01%: last year\u2019s 3.36% inflation would be 3.35%<\/span>\u00a0<\/span><\/p>\n

Some firms may skimp on product ingredients or quality rather than shrinking the product size or increasing the price. Hotels may reduce how often they clean rooms. A food company may switch to less costly ingredients. Firms may run chronically understaffed, increasing wait times. Restaurants may reduce portion size. When costs increase and firms try to forgo explicit price hikes, reducing product size is one answer. But most of us catch on eventually. A 10% price increase or a 10% size reduction? Six of one, half a dozen of the other.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

During times of inflation, U.S. Presidents have berated firms for daring to raise prices, even though government policies caused the inflation. Rather than raising prices, some manufacturers reduce product sizes or quantities while maintaining the same money price, effectively increasing the cost per unit. This strategy is prevalent in the food and household goods sectors, […]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[532,1232,1594,1597,93,1277,99,1596,7,1384,1595,1593],"class_list":["post-169","post","type-post","status-publish","format-standard","hentry","category-inflation","tag-bureau-of-labor-statistics","tag-consumer-behavior","tag-consumer-prices","tag-corporate-strategy","tag-cpi","tag-economic-policy","tag-food-prices","tag-household-goods","tag-inflation","tag-pricing-strategy","tag-product-downsizing","tag-shrinkflation"],"yoast_head":"\nShrinking Goods, Growing Prices \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/06\/20\/shrinking-goods-growing-prices-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shrinking Goods, Growing Prices \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"During times of inflation, U.S. Presidents have berated firms for daring to raise prices, even though government policies caused the inflation. 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