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  • Writer's pictureEdwin and George

Shrinkflation. Why you need to earn more - now

Updated: Sep 13, 2022

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‘To the unsuspecting Aussie shopper, it could seem that the cost of popular grocery products, like chips, chocolate bars and peanut butter, has not been rising too much amid the highly publicised cost of living crisis hitting Australia. But all is not what it seems.’ (1)

We thought we would write a serious blog this week.

  • A deep analysis about the economy or the jobs market. Add a bit of economic theory to give the blog authority.

  • An in-depth investigation on why wages aren’t keeping up with prices – making us all feel a bit worse off.

So here it is. Well, sort of.

Forget about inflation and rising prices – forget about the cost of living going up - here’s the real reason you need a pay rise – now.

And it’s purposely being hidden from view.


Yes, Shrinkflation.

Economic definition:

Shrinkflation, also known as package downsizing, is the process of items shrinking in size or quantity, or sometimes reducing in quality, while their prices remain the same or increase.

  • ‘Shrinkflation allows companies to increase their operating margin and profitability by reducing costs whilst maintaining sales volume, and is often used as an alternative to raising prices in line with inflation.’ (2)

Ok, enough of the economic theory. What does it mean in practice?

It’s a bit like inflation - but we’re not supposed to see it.

Or, as ABC News puts it:

‘Shrinkflation strikes as wages remain stagnant, meaning you’re paying more for less.’ (3)

And here is how it works.

One day you call into Coles and pick up your favourite treat – say a packet of Tim Tams or a chocolate bar – and you suddenly realise there’s less in the packet than before and the price is the same.

  • If you look around you, it’s a problem that is becoming more common.

It’s a problem that is high on the academic agenda.

University of Queensland economic and finance expert, Peter Philips, says there are multiple reasons for the cost-saving strategy – but the result is always the same.

‘When costs go up in the manufacturing process, you can increase your prices or put a few less chips in the packets, and hope you still get your margin.’ And hope, nobody notices. (4)

(Sorry, he didn’t say the last bit.)

So, where’s the evidence?

  • In the UK, a small box of Kleenex tissues consisted of 65 tissues and now there are 60.

  • Nestle has slimmed down their Nescafe Americano coffee from 100 grams to 90 grams (5)

  • In Germany, the consumer protection authority has been inundated with complaints.

  • There is outrage at the thought of a 14% reduction in a packet of ‘gummy bears’ and 20% reduction in potato chips. (6)

  • In France, a new group called Foodwatch has been set up to protect consumers from shrinkflation. (7)

  • In the US, Dominos Pizza announced earlier this year that it was shrinking it’s 10-piece chicken wings to 8 -pieces – for the same price. (At least they made an announcement.)

  • In Ohio, one consumer noticed that his 14-ounce packet of sliced cheese had reduced to 12 ounces. ‘I buy a block of cheese now and slice it myself,’ he said. (8)

And things are no better here in Australia.

  • Earlier this year, Mcdonald's was accused of shrinkflation at a time it was also increasing prices. One customer claimed that the McChicken burger is 80% of the size it used to be. (If big Macs are tiny now, shouldn’t they change the name?)

  • And, recently ‘News Daily’ had the headline ‘Shrinkflation bites as Snickers bars get downsized.’ A 50-gram bar is now – 44 grams. (9)

And there are other things that are shrinking in Australia.

  • Tim Tams Chewy Caramel, Choc Mint and Double Coated biscuits used to have 11 in a pack – but now have 9 for the same price.

  • Weetbix value pack now contains 1.2kg – where before it contained 1.5kg

  • Smiths chips now contain 120 grams instead of 170 grams.

  • Maltesers fun size used to contain 144 grams of chocolate – but now have just 132 grams. (10)

It’s inflation by stealth.

(Editors note definition of the word ‘stealth:’

  • ’You do something. You do it quietly and carefully so that no one will notice what you are up to.’)

Things are expected to get worse. And, unbelievably, there are more ‘tricks’ to look out for.

  • Companies can detract attention from what is going on – like giving smaller packets bright new labels – or hide what they’re up to by putting in place temporary ‘special offers.’

Andrew Leigh, Australia’s Assistant Minister for Competition, Charities and Treasury told ‘News Daily’ that companies have been downsizing products because consumers take less notice of the loss of a few grams than they would a price hike. ‘Although companies are facing supply chain pressures,’ Dr Leigh said, ‘it’s important they don’t treat consumers like mugs.’ (11)

Phew – that’s all right then.

Now, perhaps when things get ‘back to normal’ and inflation declines, companies might announce lower prices and larger packets.

However, we suspect that once a product gets smaller, it will stay that way. Sadly, if you are now a small Mars bar, you’re not going to grow into a big Mars bar, no matter how hard you try.

Best to ask for a pay rise – now.

  1. Shrinkflation, the sneaky way groceries are getting more expensive,, 17 June 2022

  2. Wikipedia

  3. Shrinkflation strikes as wages remain stagnant, meaning you’re paying more for less, ABC News, 12 April 2022

  4. Shrinkflation strikes as wages remain stagnant, meaning you’re paying more for less, ABC News, 12 April 2022

  5. No, you’re not imaging it, package sizes are really shrinking, abcNews, 8 June 2022

  6. Forget inflation. Shrinkflation is sparking fury in Germany, Bloomberg, 12 August 2022

  7. Petition launches against shrinkflation in shops in France, Connexion, 5 September 2022

  8. No, you’re not imaging it, package sizes are really shrinking, abcNews, 8 June 2022

  9. Shrinkflation bites as Snickers bars get downsized, News Daily

  10. Shrinkflation bites as Snickers bars get downsized, News Daily

  11. The sneaky way companies are getting Aussies to pay more for groceries,, 15 March 2022

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