Shrinkflation
Topic: Inflation and Index Numbers: CPI, WPI, IIP and the Deflator · NCERT: Beyond NCERT
Meaning
Shrinkflation is a hidden price rise. The company keeps the price the same but makes the pack smaller or puts less in it. The buyer pays the same money for less, so the real price per gram or per unit has gone up. Index compilers must adjust for the smaller quantity. Otherwise the CPI will miss this price rise.
Example
A packet of biscuits still costs the same, but it now holds fewer biscuits than before. The label price has not changed, yet the price per biscuit has risen.
Don't confuse with
- Greedflation: firms openly raise prices beyond their cost increases. In shrinkflation, the price tag stays the same and the pack gets smaller.
Related concepts
- Inflation
- Inflation rate
- Base effect
- Food inflation
- Creeping inflation
- Galloping inflation
- Hyperinflation
- Disinflation
- Deflation
- Reflation