From Chocolate to Beer, Shrinkflation Hits the Supermarket - Bloomberg
Even with price pressures tame to non-existent in the industrial
world, economist Pippa Malmgren says they’re there if you look.
A former adviser to President George W. Bush,
Malmgren is zeroing in on what’s come to be known as “shrinkflation” --
where companies charge consumers the same, or more, for less. That may
foreshadow an overall jump in prices, an alarm she’s been sounding for a
while.
“Shrinking the size of goods is exactly what happened in the
1970s just before inflation proper set in,” she writes in her new book,
“Signals: The Breakdown of the Social Contract and the Rise of
Geopolitics.”
It also explains why people are so agitated by a higher cost
of living, writes Malmgren, who founded London-based DRPM Group, a
consulting firm.
Take the Dairy Milk bar produced by Mondelez International
Inc.’s Cadbury unit. In 2011, the company lopped two squares of
chocolate from the snack, holding the price unchanged. At the time, the
company cited rising costs. Last year, it made the corners of the bar more rounded, reducing the weight.
The U.K. consumer group Which? turned up other examples in a study it conducted last year. It found boxes of Nestle SA (NESN)’s Shredded Wheat cereal had shrunk to 470 grams from 525 grams yet still cost 2.68 pounds ($4.45).
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