Economy

Companies Are Raising Consumer Prices But You Have to Be a Sleuth to Detect It

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  • Some companies are reducing the contents of their packaging, a dynamic consumer advocates call "shrinkflation."
  • It's a backdoor way to raise costs for consumers without adjusting sticker price, advocates said.
  • Inflation has also pushed consumer prices to rise at their fastest 12-month pace in four decades.
  • The Federal Reserve raised interest rates Wednesday to rein in inflation.

Americans are paying more for a broad swath of household goods these days. Even items without a higher sticker price may still cost more — it's just hard to notice at first glance.

That's because some companies have reduced the contents of their packaging. A cannister that used to contain 16 ounces of coffee may now have just 14 ounces; 300 sheets of toilet paper may have fallen to 275 sheets.

The consumer ultimately pays more money for this "shrinkflation," since they pay the same price for a lesser amount. But they may not notice without reading the fine print on packaging.  

"It's a sneaky way to pass on a price increase to shoppers," said Edgar Dworsky, founder of website Consumer World and a former assistant attorney general in Massachusetts who focused on consumer protection.

"Manufacturers know consumers are price-conscious," he added. "If they raise the [sticker] price, they know shoppers will notice that."

'Double whammy'

Product downsizing isn't new — U.S. companies have used the tactic for decades, Dworsky said. Larger sizes don't necessarily disappear forever; companies sometimes reintroduce them later but at a higher price, as with "family size" cereal boxes or "party size" potato chip bags.

Shrinkflation tends to come in cycles, though, and it's cropped up more regularly over the last several months.

Recently, Dworsky noticed packages of a certain brand of raisins declining by about 2.5 ounces in weight, while another company has reduced the size of its rolls of toilet paper. Trims have also been made by certain brands of yogurt, body wash, soap and cookies.

This is happening against the backdrop of consumer prices rising at their fastest 12-month pace in about 40 years.

"It's a double whammy," said Jack Gillis, executive director of the Consumer Federation of America, an advocacy group. "Consumers are being hit with two things at the exact same time: severe inflation and the decision by many companies to shrink the size of the product contents of the things we buy every day."

The Federal Reserve raised its benchmark interest rate by 0.25% from near zero on Wednesday to rein in inflation. It's the first time the central bank has hiked rates since 2018.

Raising prices and reducing volume help companies buoy their bottom lines. Their costs are rising, too. Covid-19 outbreaks and the war in Ukraine are snarling supply lines, lifting prices for raw materials, and higher gas and fuel prices may cause elevated shipping costs to distribute goods, for example.

Consumer advocates suspect, however, that some companies may artificially lift prices for consumers to take advantage of the inflationary environment and boost profits.

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Consumers can fight shrinkflation by looking at a product's "unit pricing" at the store. This shows the cost per ounce or other unit of measure, letting buyers more easily judge which brand offers the best relative value.

"Cost per unit is your best weapon against shrinkflation," Gillis said.

Consumers should also get more accustomed to examining packaging for net weight, looking beyond a brand's marketing, Dworsky said.

Substituting store brands for higher-priced brand-name items is also a good way to save on grocery bills, often without sacrificing on quality, Gillis added.

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