Shrinkflation

Source: The post is based on the article “Shrinkflation” published in The Hindu on 22nd September 2022

What is the News?

This article talks about Shrinkflation.

What is Shrinkflation?

Shrink inflation is when a product downsizes its quantity while keeping the price the same. 

For example, reducing the scoops of ice cream in a container or reducing the number of chips in a packet would count as shrinkflation. 

When does Shrinkflation occur?

Shrinkflation occurs when materials or ingredients used to make products become more expensive and when there is intense competition in the market.

As a result, instead of raising prices, they might just give less of the product so as to maintain their profit margins.

Shrinkflation can also occur in different ways. For instance, if consumers are aware that the quantity is constantly declining, they would switch or change brands. 

To prevent this, a product can reformulate or remove ingredients while maintaining its price. For example, Cadbury Dairy Milk stopped using foil which it used to prevent chocolate from losing its quality and flavour in order to save expense. 

What is the effect of Shrinkflation?

Shrinkflation deceives consumers into believing that the brands they buy are not affected by inflation, since container and vessel sizes are reduced by very small amounts, saving manufacturers more money in the long run.

What can be done to tackle shrinkflation?

India needs a mix of macroeconomic policies to manage demand and supply, as well as address structural rigidities in the economy. 

In India, the Right to Information has been recognised as a consumer right under the Consumer Protection Act, 2019. This means that the consumer has the right to know the quality, quantity, potency, purity, standard, and price of goods. 

Therefore, the Central Consumer Protection Authority needs to bring some guidelines to inform consumers when the weight of a product is reduced, instead of letting consumers be fooled by companies.