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Food package sizing is shrinking amid inflation

Yahoo Finance reporter Brooke DiPalma explains "shrinkflation" — and how it's making a comeback in 2022.

Video Transcript

AKIKO FUJITA: Well, the cost of food at home increased 13.1% in the month of July, but many consumers are now concerned about the size of the products they're purchasing, also known as shrinkflation. Brooke DiPalma here to break it all down. Brooke, you went out to grocery stores. You saw it. How--

BROOKE DIPALMA: Absolutely.

AKIKO FUJITA: What kind of shrink-- what kind of decline are we talking about?

BROOKE DIPALMA: Yeah, well, it's actually not a new phenomenon. It rose to popularity earlier this summer when the pricing of these products are just continuing to rise year over year. And consumers are questioning what exactly they're paying for here. And so it was a term coined by a British economist nearly a decade ago. And the exact definition there is the situation when the price of a product stays the same, but its size gets smaller.

Now, when I spoke to an economist at the Bureau of Labor Statistics, he emphasized this is not a new phenomenon. It's something that's been going on for a long time. And it really rose in popularity during the pandemic when people were buying more consumer products there. And also, too, it's something that the BLS does, in fact, account for. So, for example, you see orange juice. It used to be 64 ounces. Now it's only 59 ounces. That does get factored into the average price data there.

RACHELLE AKUFFO: I did notice my Girl Scout cookies were a little light in the box this year. So that's definitely true. So, Brooke, where exactly are we seeing this shrinkflation happening?

BROOKE DIPALMA: Yeah, so when I spoke to that economist at the Bureau of Labor Statistics, he emphasized that we're seeing it in a lot of household products like paper towels, as well as toilet paper. But I spoke to one consumer advocate-- longtime advocate there, Edgar Dworsky. He's the founder of consumerworlds.org.

And he really researches this stuff day to day. And he said that in times of high inflation, when the cost of products like cereal and bakery products-- today, we saw that category up 15%-- consumers pay closer attention to it. But once again, happening for a long time there. But he did say that brands basically respond to these higher costs in three different ways. They either fix the sizing, they change the ingredients, or they increase the pricing there.

Now, in most cases, what we're seeing is that change in size of products. It just makes the most sense in order to get these products out efficiently and also not change up something that consumers already know and love. And now he also runs a site called mouseprint.com, where consumers actually send in what they're seeing. And so I do want to point to two examples here.

First, we have a package of Utz pretzels. Now what we saw there is a 28-ounce package. It went down to 26 ounce. Now I did reach to Utz. They did not respond with a comment. Another example is PepsiCo's Quaker cereal. Now this is really interesting here. So the giant size was 24.8 ounces. It almost looks like it's smaller in size, but then they introduce it as a family size, 22.3 ounces.

And I spoke to another expert at the University of Illinois, Sheldon Jacobson. And he called it like a magic show. So what these companies will do is they'll reintroduce a product with a different name, a different style packaging, so that the consumers seamlessly think that they're actually winning more here, getting a bigger package, a family size, a giant size, when, in actuality, they're getting less in that package.

AKIKO FUJITA: I feel like I'm getting tricked right into it. I have noticed, by the way, toilet paper, right? I mean, that's one that I have-- you just look at the price tag, and you think what you're getting. Like, this didn't cost this much. What does that ultimately mean for the consumer? They're already paying higher prices because of inflation. Now they're getting less for their money. What's the breakdown?

BROOKE DIPALMA: Well, the solution really here is that consumers are aware of it, even after inflation cools down in the food sector, that is. Because by consumers being educated on what they're buying, then there'll be more backlash, perhaps, to these companies producing these products. But in many cases, especially with the toilet paper one, these big names are ultimately saying that no, no, no, actually, you are still getting more.

You're still getting more bang for your buck. You're still getting more sheets per roll. And so in that case, by consumers sort of raising the bar here, making a stand and sticking to it, even after inflation cools down, perhaps we'll see a change there. Perhaps we'll go back to those huge king size Reese's or Hershey bars that we saw a long time ago that still are around, but maybe it costs a little more.

AKIKO FUJITA: Time to go to Costco, right, Rachelle? Got to make a run to Costco.

RACHELLE AKUFFO: That's right. That's right. A big thank you there, Brooke there, discussing all of this. And as I was mentioning, when I got my Girl Scout cookies this year, I was quite disappointed at how light the boxes felt. Meanwhile, the prices have actually ticked up for some of those products. I mean, it does make sense when you see some of these input costs, sugar, and labor, and things that the prices go up, but the honesty in the marketing is what I take an issue with. Just let us know what's happening, you know?

AKIKO FUJITA: Yeah, I think you're right about that. Just don't introduce it as a new product, right? I mean, we have heard a lot of these companies talk about that on their call, where they are seeing cost prices go up. They are increasing their prices as well. The sizing of the product, we haven't necessarily heard. Obviously, if you look at those photos Brooke just shared, pretty noticeable even if it's a tiny, tiny difference.

RACHELLE AKUFFO: And there's only just a few brands that are keeping prices the same. We've had the Arizona iced tea CEO on before, and he said he's going to keep his prices at $1. And that's even despite the cost of aluminum going up, the cost of sugar, high fructose corn syrup going up, keeping the prices the same. So we really do have to be vigilant when we're sort of going through-- because I know I was looking at the family size versus that other large size that they had. I noticed that with my Rice Krispies. I didn't care for that. I see what they're doing.

AKIKO FUJITA: I don't know. I stick to Trader Joe's. I don't know where you go grocery shopping, Rachelle, but I mean, I'm imagining they're doing the same. I'm going to go today, probably be a little more vigilant. But I haven't seen these changes just yet, at least in what I see.