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Business & Education

The Indicator From Planet Money Probes Inflation's Sneaky Cousin: Shrinkflation

NOEL KING, HOST:

Sometimes, companies shrink their products - think of, like, a smaller bag of potato chips - but then they charge the same price as the bigger bag. Economists call that shrinkflation. Here are Greg Rosalsky and Stacey Vanek Smith with NPR's Indicator podcast.

GREG ROSALSKY, BYLINE: A couple weeks ago, Edgar Dworsky walked into a stop-and-shop grocery store in Somerville, Mass.

EDGAR DWORSKY: I looked in the cereal aisle.

STACEY VANEK SMITH, BYLINE: Edgar searched the aisle hoping to find the smoking gun, but he was too late. The store had already replaced old General Mills cereal boxes with newer ones.

DWORSKY: So I started walking around the store. And then, lo and behold, there's an end-aisle display of some General Mills cereals.

VANEK SMITH: The tip Edgar had received was right on the money. General Mills had downsized the content of their family-sized boxes from 19.3 ounces to 18.1 ounces.

(SOUNDBITE OF MUSIC)

DWORSKY: I actually took them up to the scanner. And they all rang the same even though they were different sizes.

VANEK SMITH: Edgar is a former Massachusetts assistant attorney general and a longtime consumer advocate. He has spent decades tracking these crimes

ROSALSKY: Of shrinkflation.

VANEK SMITH: Shrinkflation?

ROSALSKY: The term shrinkflation is actually somewhat new. But Edgar actually prefers referring to the practice by, like, an older name - downsizing. It means the same thing and is probably as old as mass consumerism.

VANEK SMITH: Edgar says that companies tend to resort to shrinkflation for the same reason that they resort to inflation, which is when they have to deal with rising business costs.

DWORSKY: Because consumers are not net weight-conscious. They're price-conscious, but not net weight-conscious.

ROSALSKY: So it's like stealth inflation, basically?

DWORSKY: It is a sneaky way to pass on a price increase.

ROSALSKY: So if consumers were, like, the rational creatures depicted in, you know, classic economic theory, we wouldn't be tricked by shrinkflation.

VANEK SMITH: Right. We'd be all about the net weight (laughter).

ROSALSKY: We would keep our eyes on the price per Cocoa Puff.

VANEK SMITH: So a lot of consumers are pretty oblivious to shrinkflation, but many consumers are not. And some people get very, very into this. In fact, there's a whole thread on the website Reddit that is just dedicated to shrinkflation. Recently, of course, Greg, there was a post about the downsizing of General Mills' cereal.

ROSALSKY: So we reached out to General Mills about reports that they're downsizing their cereals as part of this strategy. So they provided us with this statement. The change, they say, quote, "allows more efficient truck loading, leading to fewer trucks on the road and fewer gallons of fuel used."

VANEK SMITH: So they're saying that making smaller boxes of Cocoa Puffs is better for the planet?

(LAUGHTER)

ROSALSKY: I - you know what? I'm not here to judge them, but maybe Edgar is.

DWORSKY: Well, it sounds like PR speak (laughter).

ROSALSKY: If this keeps up, though, I'm, like, imagining this, like, Lilliputian dystopia where we're, like, all forced to, like, eat miniature candy bars and drink tiny drinks and...

VANEK SMITH: (Laughter).

ROSALSKY: ...Wipe our bottoms with teeny-tiny squares of paper. But hopefully not.

Greg Rosalsky.

VANEK SMITH: Stacey Vanek Smith, NPR News.

(SOUNDBITE OF ALESSANDRO RIZZO AND ELLIOT GREENWAY IRELAND'S "THEME FOR THE RESTLESS") Transcript provided by NPR, Copyright NPR.