WASHINGTON — President Joe Biden is fully committed to pointing out “shrinkflation.”
The term refers to a seemingly sneaky way for companies to raise prices by slightly reducing the size of their products. Suddenly, there are fewer pretzels in the bag, less toothpaste in the tube, and shorter candy bars.
“It’s called shrinkflation,” Biden stated in his State of the Union speech on Thursday night. “You pay the same amount, but you get about, I don’t know, 10% fewer Snickers in it.”
The president’s emphasis on shrinkflation is part of a broader plan to change how voters think about the economy before the November election. Biden is trying to shift attention from criticism about high prices and instead blame big business.
He is also trying to demonstrate to ordinary people that he’s fighting for them as he works to convince the public that the economy has improved under his leadership.
He discussed the shrinkflation issue in a video released on Super Bowl Sunday and highlighted a social media post by the “Sesame Street” character Cookie Monster that complained about smaller cookies.
The country’s low 3.7% unemployment rate and record 16 million applications to start new businesses have mostly been ignored by voters, who are focusing on higher grocery and housing prices after inflation hit a four-decade high in June 2022 at 9.1%. Even as inflation has dropped to 3.1% annually, shoppers are still worried about paying more at supermarkets.
“Joe Biden recognizes that high grocery prices are politically vulnerable,” said Ryan Bourne, an economist at the Cato Institute, a libertarian think tank. “When consumers go to the grocery store, they remember that they’re paying more than they did in 2019.”
But Bourne cautioned that, on the other hand, companies might have simply raised their list prices without shrinkflation, possibly upsetting consumers more and harming the president’s approval on the issue. Only 34% of U.S. adults say they agree with how Biden has handled the economy, according to polling by The Associated Press-NORC Center for Public Affairs Research.
“A number of companies did that because they thought that their customers would prefer it to paying higher headline prices,” Bourne said. “So I think the president should be very careful what he wishes for when he says he thinks shrinkflation is unfair.”
Sen. Katie Britt, R-Alabama, delivered the GOP response to the State of the Union and placed the blame for inflation solely on Biden.
“His reckless spending put our economy in a tough spot and caused the cost of living to skyrocket — the worst inflation in 40 years,” Britt said.
Republicans have argued that prices rose because of Biden’s $1.9 trillion pandemic relief package, even though the price increases were also global in nature. This indicates that broken supply chains and higher energy and food prices after Russia’s invasion of Ukraine played a role.
In a report published Wednesday, the liberal economic advocacy group Groundwork Collaborative delved into the inflation numbers published by the Bureau of Labor Statistics and documented the evidence of shrinkflation, finding it played a meaningful but modest role in higher prices since 2019.
More than 7% of the rise in coffee prices was due to reduced packaging. About 10% of the increased prices for snacks and household paper products came from shrinkflation. And around 7% of the inflation for ice cream was caused by shrinkflation, a product that the president loves.
According to the report, companies may have hidden the higher prices from customers, but they were open with investors during earnings calls. Some companies like General Mills have also presented the reduced package sizes as a way to manage their own costs and address the challenge of climate change.
The snack company Utz decreased the size of its potato chip bags to 9 ounces, as mentioned in the report. It removed two ounces of pretzels from its pretzel jars, with the CEO touting to stock analysts its ability to manage what the industry refers to as “price pack architecture.” PepsiCo also reduced the size of its Frito Scoops bags, Gatorade bottles, and Doritos bags.
Linsday Owens, executive director of the Groundwork Collaborative, stated that the reason for the current rise in shrinkflation is because it's a late-stage form of ‘greedflation’ — when you’ve exhausted all avenues for raising prices and consumers can't bear another increase. “It’s much more misleading than a list price hike,” she said.
Senator Bob Casey, D-Pennsylvania, has proposed a bill to prohibit shrinkflation by directing the Federal Trade Commission to consider it an unfair or deceptive practice, allowing the government to seek civil penalties in court against companies that engage in it.
Biden fully supported the measure in his speech.
“Pass Bobby Casey’s bill and put an end to this,” he said.
