Posted on 07/08/2021 11:15:05 AM PDT by blam
The continued decline in Treasury yields has prompted many short-sighted arm-chair analysts to declare that the Fed was right about inflationary pressures being “transitory”. Of course, as Treasury Secretary Janet Yellen herself admitted, a little inflation is necessary for the economy to function long term – because without “controlled inflation,” how else will policymakers inflate away the enormous debts of the US and other governments.
As policymakers prepare to explain to the investing public why inflation is a “good thing”, a report published this week by left-leaning NPR highlighted a phenomenon that is manifesting in grocery stores and other retailers across the US: economists including Pippa Malmgren call it “shrinkflation”. It happens when companies reduce the size or quantity of their products while charging the same price, or even more money.
As NPR points out, the preponderance of “shrinkflation” creates a problem for academics and purveyors of classical economic theory. “If consumers were the rational creatures depicted in classic economic theory, they would notice shrinkflation. They would keep their eyes on the price per Cocoa Puff and not fall for gimmicks in how companies package those Cocoa Puffs.”
However, research by behavioral economists has found that consumers are “much more gullible than classic theory predicts. They are more sensitive to changes in price than to changes in quantity.” It’s one of many well-documented ways that human reasoning differs from strict rationality (for a more comprehensive review of the limitations of human reasoning in the loosely defined world of behavioral economics, read Daniel Kahneman’s “Thinking Fast and Slow”).
Just a few months ago, we described shrinkflation as “the oldest trick in the retailer’s book” with an explanation of how Costco was masking a 14% price hike by instead reducing the sheet count in its rolls of paper towels and toilet paper.
NPR’s report started with the story of Edgar Dworsky, who monitors grocery store shelves for signs of “shrinkflation”.
A couple of weeks ago, Edgar Dworsky walked into a Stop & Shop grocery store in Somerville, Mass., like a detective entering a murder scene.
He stepped into the cereal aisle, where he hoped to find the smoking gun. He scanned the shelves. Oh no, he thought. He was too late. The store had already replaced old General Mills cereal boxes — such as Cheerios and Cocoa Puffs — with newer ones. It was as though the suspect’s fingerprints had been wiped clean.
Then Dworsky headed toward the back of the store. Sure enough, old boxes of Cocoa Puffs and Apple Cinnamon Cheerios were stacked at the end of one of the aisles. He grabbed an old box of Cocoa Puffs and put it side by side with the new one. Aha! The tip he had received was right on the money. General Mills had downsized the contents of its “family size” boxes from 19.3 ounces to 18.1 ounces.
Dworsky went to the checkout aisle, and both boxes — gasp! — were the same price. It was an open-and-shut case: General Mills is yet another perpetrator of “shrinkflation.”
It’s also being used for paper products, candy bars and other packaged goods.
Back in the day, Dworsky says, he remembers buying bigger candy bars and bigger rolls of toilet paper. The original Charmin roll of toilet paper, he says, had 650 sheets. Now you have to pay extra for “Mega Rolls” and “Super Mega Rolls” — and even those have many fewer sheets than the original. To add insult to injury, Charmin recently shrank the size of their toilet sheets. Talk about a crappy deal.
Shrinkflation, or downsizing, is probably as old as mass consumerism. Over the years, Dworsky has documented the downsizing of everything from Doritos to baby shampoo to ranch dressing. “The downsizing tends to happen when manufacturers face some type of pricing pressure,” he says. For example, if the price of gasoline or grain goes up.
The whole thing brings to mind a scene from the 2000s comedy classic “Zoolander”.
I’ve already seen 1.25qts of ice cream in the grocery stores.
Fewer slices of pepperoni on your pizza.
It’s a pendulum swing. We cycle through both ends every decade or so. Shrink product to maintain price, then “new bigger size” to increase price.
Ok, so next up is the one quart half gallon of ice cream.
Ya think? Toilet paper rolls now look like a roll of duct tape. But, no one notices (wink, wink).
All major vendors have individual specific deals with all the different chains that carry their goods.
Walmart gets a certain size box of stuff at a certain price. Dollar General gets slightly different size box of stuff with confusing prices. 7-11 and Quiky~Mart get the smallest containers with modified graphics to make it look the biggest of all 3 at psycho prices. Local grocery stores will get you more bang for your buck every time across the entire grocery counter.
I am biased. I own a grocery store
...and the NPR gang should be the 1st ones led to the gallows in a proper “reset”.
Community Coffee very popular and good (no chicory) New Orleans brand. I saw some at CVS a few weeks ago and didn’t get it because I didn’t need coffee, but wish I had.
Many of my favorite recipes over the years call for one 14 oz can or 16 oz package of this or that. Now that everything is shrinking, it’s annoying to measure out the miss portion and try to preserve the unused 2nd package of food.
There is no swing. It is a constant commercialized manipulation of packaging to out wit last cycles missed sales. Every major food company is involved. Its part of the business. Articles like this fall into the waiting eyes of those looking for someone to blame in this very moment.
I remember in the 70’s when the one pound can of coffee became a 13 ounce “pound” of coffee.
Quarter Pounder aint half the size it used to be!
“This has been going on for a long time”
The 50’s at least, but likely forever. Writers (and now clickbait bloggers) keep re-discovering the accordioning of sizing and pricing every few years as though it’s a major discovery.
In 1959 a candy bar was a nickel (cue the guy from Seinfeld).
Later on, a candy bar grew in size and became a dime. And then it gradually shrank back down.
Then, what do you know. It grew back and was fifteen cents. Rinse and repeat.
Summary: Products grow and shrink and you either pay or don’t. Folks know what’s going on - they aren’t fooled. But they either want the candy bars or they don’t. Apparently they do, at whatever the size and price. But the candy bars don’t just shrink down to nothing (except for the mini-size, and those bags may shrink too, but again, not down to nothing).
Summary of summary: Blogger discovers shrinkage again.
was 3/4’s full or more when I was a kid.
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Full when I was a kid. Candy was pennies too
There was shrinkage.
Compare the size of a Big Mac of today to one from 20 years ago. I bet it’s only 2/3 the size or smaller.
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Compare the size of a White Castle burger of today to one from 40 years ago ... can you say postage stamp?
“A couple of weeks ago, Edgar Dworsky walked into a Stop & Shop grocery store in Somerville, Mass., like a detective entering a murder scene.”
We used to call this yellow journalism, or maybe just bad over-dramatization. Now I just call it clickbait.
“Compare the size of a Big Mac of today to one from 20 years ago. I bet it’s only 2/3 the size or smaller”
I’m sure that’s true, although I don’t order them. But the muffin on my Egg McMuffin still matches the fried egg (?)
What’s less healthy than Cocoa Puffs?
I remember when a can of tuna made two good sized sandwiches.
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