FINANCE
Inflation in the US: What is ‘skimpflation’ and how does it affect consumers?
In an effort not to appear that prices are increasing companies may instead choose to slightly lower the quantity of the product in question.
‘Skimpflation’, also known as ‘shrinkflation,’ is a term used to describe a situation where companies respond to inflation by reducing the quantity of the products they offer, rather than raising their prices. In other words, it refers to a tactic employed by businesses to maintain the appearance of stable or low prices while actually offering less value to consumers.
It is a clear problem for consumers as the lack of clarity of what is altered may not be noticed.
How does it affect consumers?
‘Shrinkflation’ effectively meaning consumers get less for the same amount of money. It makes challenging work for consumers to recognise that they are actually paying more for less value, as the price tags on products or services remain the same.
The items will never return to their original size nor will they go down in price. Most items never reduce in price.
“After products are repeatedly reduced in size, the manufacturer will come out with a new, larger version of it – sometimes with a fanciful new name,” says Edgar Dworsky, a former US consumer rights lawyer and founder of resource guide Consumer World.
Examples of this in practice are terms like “party” or “share” size.
When products offer less value for the same price, it effectively reduces consumers’ purchasing power. They have to spend more to maintain the same level of quality or quantity they were accustomed to, straining budgets.
With current problems like relatively high inflation and very high interest rates this is a very pressing problem. Low-income individuals and families are always more affected by actions like ‘skimpflation’ because they do not have the flexibility to switch to other alternatives.