The prices of your favorite products haven’t changed, but you may still be paying for the 40-year record high inflation. Here’s why.
When you go to the supermarket, you may have some inkling about how Alice in Wonderland felt. Your favorite products on the shelves appear smaller than you recalled.
Noah Davis, a Seattle-based attorney, said he started noticing shrinkflation about five months ago. It began with an Amy’s Margherita frozen pizza, which sell for about $8, depending on the retailer. One pie, which used to feed three of his children in the past was only enough for one child, he said.
That includes Amazon’s AMZN, +0.68% house brand dishwasher pods, Truth protein bars, General Mills’ GIS, -1.76% Golden Grahams cereal and more. The down-sizing was especially necessary since it would’ve been more costly to construct new gumball machines to accommodate different coins if gumball makers raised prices.
Items or brands that consumers are more likely to buy than others are given more weight when it comes to calculating the overall price level change each month. The same applies to expenses that represent a bigger chunk of the typical U.S. household’s budget, such as housing.So if the price of a product being tracked doesn’t change, but the size or quantity decreases, “typically if it’s a small change we will convert the price change to a per-unit amount,” Reed told MarketWatch.
In other words, they’d ideally like to stay profitable at a constant price or size of a given product. But realistically, that is impossible.“‘Just because a box of Cheerios is $4 today, it’s not an eternal commitment to always sell that amount of cereal for that price forever’”
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