How Companies Are Secretly Raising Prices: Truth About Shrinkflation

Have you ever reached for your favorite snack at the grocery store and felt like something was… off? The package looks familiar, the price seems normal, but when you open it, there’s noticeably less inside than before. This isn’t your imagination—it’s a clever pricing strategy called shrinkflation, and it’s happening all around us. But shrinkflation is just one piece of a larger puzzle that includes an even more concerning trend: greedflation. Together, these tactics are quietly draining our wallets while companies maintain the illusion of stable prices. 

In today’s economic climate, where inflation dominates headlines and squeezes household budgets, understanding these pricing strategies is more important than ever. This article will take you deep into the world of shrinkflation and greedflation, revealing how they work, why companies use them, and most importantly—how you can protect yourself from their effects. We’ll examine real-world examples, explore the psychology behind these tactics, and provide practical strategies to ensure you’re getting fair value for your money. 

What Exactly Is Shrinkflation? 

Shrinkflation refers to the practice of reducing a product’s size or quantity while maintaining its price. It’s essentially a hidden price increase—instead of charging more for the same amount, companies give you less for the same price. This subtle approach allows businesses to maintain their profit margins without triggering the same consumer resistance that comes with visible price hikes. 

The concept isn’t new. Consumer advocates have tracked shrinkflation for decades, but it’s become particularly prevalent during periods of high inflation. When production costs rise—whether due to more expensive ingredients, higher energy prices, or increased labor costs—companies face a dilemma: absorb the costs and see profits shrink, or pass them on to consumers and risk losing price-sensitive customers. Shrinkflation presents a third option that many businesses find appealing. 

How Shrinkflation Works in Practice 

Let’s look at some concrete examples that illustrate how shrinkflation plays out in real life: 

• Chocolate bars: Many candy manufacturers have gradually reduced their product sizes over the years. A standard chocolate bar that once weighed 100 grams might now be 85 grams—a 15% reduction—while maintaining the same retail price. 

• Chips and snacks: Potato chip bags are notorious for shrinkflation. What was once a “family size” bag might now contain significantly fewer chips, with clever packaging designs masking the reduction. 

• Household products: From laundry detergent to toilet paper, many everyday essentials have seen their package sizes shrink while prices remain stable. 

• Beverages: Juice cartons and soda bottles often undergo subtle size reductions, sometimes by as little as 50ml at a time, making the changes harder to notice. 

The key characteristic of shrinkflation is its subtlety. Companies typically make small, incremental changes that are easy to overlook unless you’re paying close attention. This gradual approach makes it less likely that consumers will notice or react negatively to the changes. 

The Psychology Behind Shrinkflation 

Why does shrinkflation work so effectively? The answer lies in consumer psychology and how we perceive value and price changes. 

Price Sensitivity vs. Quantity Sensitivity 

Research shows that consumers are generally more sensitive to price changes than to quantity changes. When faced with a direct price increase—say, a candy bar going from $1 to $1.15—many shoppers will notice and potentially reconsider their purchase. However, when the price stays at $1 but the size decreases from 100g to 85g, far fewer consumers detect the change. 

This phenomenon occurs because: 

1. Price is more salient: The price tag is what we look at first when making purchasing decisions. Package sizes, unless dramatically different, often escape our notice. 
2. Memory is imperfect: Most of us don’t remember the exact size of products we buy regularly, making gradual reductions hard to detect. 
3. Packaging tricks: Companies often redesign packaging to disguise quantity reductions, using taller but thinner containers or adding more air to bags. 

The “Just Noticeable Difference” Principle 

Shrinkflation exploits what psychologists call the “just noticeable difference” threshold—the minimum change required for a person to detect a difference. By keeping changes below this threshold, companies can gradually reduce sizes without alerting most consumers. 

For example, reducing a 500g product to 490g (a 2% decrease) will likely go unnoticed, while dropping it to 400g (a 20% decrease) would be obvious. The strategy relies on making many small reductions over time rather than one large change. 

Greedflation: When Price Increases Exceed Costs 

While shrinkflation represents one way companies manage rising costs, another more controversial practice has emerged: greedflation. This occurs when businesses raise prices more than necessary to cover increased expenses, using inflation as cover to boost profit margins. 

Understanding Greedflation 

Greedflation differs from regular inflation or even shrinkflation in several key ways: 

1. Disproportionate price hikes: Prices increase significantly beyond what’s needed to offset higher costs. 
2. Record profits: Many companies implementing these strategies report unusually high profit margins during the same period. 
3. Justification through inflation: Businesses blame general inflation while quietly exceeding necessary price adjustments. 

Several industries have been accused of greedflation in recent years, including: 

• Food and beverage: Major food companies reporting record profits while citing “supply chain issues” 

• Energy: Oil companies with soaring profits during periods of price spikes 

• Consumer goods: Manufacturers using inflation as an excuse for aggressive price increases 

Why Greedflation Matters 

The consequences of greedflation extend beyond individual purchasing power: 

1. Accelerates inflation: Excessive corporate price hikes can contribute to broader inflationary pressures. 
2. Erodes consumer trust: When people feel companies are taking advantage, brand loyalty suffers. 
3. Worsens inequality: Those with lower incomes bear the brunt of these practices. 

How to Spot and Combat Shrinkflation and Greedflation 

Now that we understand these pricing strategies, how can we protect ourselves as consumers? Here are several effective approaches: 

1. Become a Unit Price Detective

The most powerful tool against shrinkflation is paying attention to unit prices—the cost per ounce, gram, or other standard measurement. Most stores display this information on shelf tags, though often in small print. By comparing unit prices: 

• You can identify when package sizes have changed 

• You can spot better deals between different brands and sizes 

• You’ll notice when “sales” aren’t actually good value 

2. Track Product Sizes Over Time

For items you buy regularly: 

• Note the net weight or volume when you first purchase something 

• Compare this to future purchases to spot reductions 

• Take photos of packaging labels for easy comparison 

3. Understand Common Shrinkflation Targets

Certain product categories are more prone to shrinkflation: 

• Snack foods (chips, cookies, crackers) 

• Coffee and tea 

• Cereal 

• Frozen foods 

• Cleaning products 

• Personal care items 

Being extra vigilant with these items can help you catch shrinkflation early. 

4. Support Transparent Brands

Some companies commit to maintaining package sizes even during inflationary periods. Supporting these businesses: 

• Rewards honest pricing practices 

• Creates market pressure against shrinkflation 

• Helps maintain options that offer true value 

5. Voice Your Concerns

When you notice shrinkflation or suspect greedflation: 

• Contact the manufacturer with polite feedback 

• Share your findings on social media (companies often monitor these channels) 

• File reports with consumer protection agencies 

The Bigger Picture: Economic and Social Impacts 

The effects of shrinkflation and greedflation extend beyond individual shopping trips. These practices have broader implications: 

Impact on Inflation Measurements 

Shrinkflation presents challenges for how we measure inflation: 

• Official inflation metrics may underestimate true cost increases 

• Quality adjustments in CPI calculations can mask shrinkflation 

• Consumers’ lived experience of inflation may differ from reported numbers 

Erosion of Consumer Trust 

When shoppers repeatedly encounter these practices: 

• Brand loyalty decreases 

• Cynicism about corporate motives increases 

• The overall shopping experience becomes more stressful 

Regulatory Responses 

Some governments have taken action: 

• France requires prominent labeling when product sizes decrease 

• The UK monitors shrinkflation through official channels 

• Consumer advocacy groups push for greater transparency 

Becoming a Savvier Shopper 

In an economic environment where every dollar counts, understanding shrinkflation and greedflation gives you an important advantage. By recognizing these tactics, you can: 

• Make more informed purchasing decisions 

• Avoid paying more for less 

• Support businesses that practice fair pricing 

• Advocate for greater transparency in consumer goods 

The key is maintaining awareness without becoming overly cynical. While many companies use these strategies, others resist them—and your purchasing choices can help shape which approach dominates in the marketplace. 

Remember that you have power as a consumer. Your attention to detail, your willingness to compare alternatives, and your voice in calling out unfair practices all contribute to a more transparent and equitable marketplace. In the battle against hidden price increases, knowledge truly is power—and now you’re equipped with the information you need to protect your budget. 

Read more: Your Grandkids Will Laugh at Your Slow Computer: The Quantum Future is Coming