Latest / Inflation and Your Money with Fexingo: Protecting Purchasing Power and Beating Inflation / How Shrinkflation Hides Higher Grocery Prices
Transcript
- Lucas: Luna, I was in the grocery store yesterday, and I picked up a bag of coffee that looked exactly the same as the one I've been buying for years. Same brand, same design, same price — $11.99. But when I got home, I noticed the net weight had dropped from 12 ounces to 10.5. Luna: Same price, less coffee. That is the textbook definition of shrinkflation. And it happens way more often than most people realize. Lucas: Exactly. And here's the thing — when the Bureau of Labor Statistics calculates CPI, they track price changes per unit, not per package. So if that coffee bag shrinks from 12 ounces to 10.5 but the price stays $11.99, the CPI methodology should catch that as a roughly 14 percent price increase on a per-ounce basis. Luna: Right, they adjust for size changes. So in theory, shrinkflation is already in the numbers. But is it actually captured? Lucas: In theory, yes. But there are gaps. The BLS updates package sizes regularly, but there's a lag. Companies often shrink packages quietly without announcing it, and the BLS might not update its sample until the next routine check — which could be months later. Meanwhile, the official CPI prints a lower number than what shoppers actually experience at the register. Luna: So the April CPI came in at 332.4, up from 330.29 in March. That's about a 0.6 percent monthly increase. But if you're buying groceries, it probably feels more like 1 or 2 percent. Lucas: Right. And core CPI, which strips out food and energy, was up to 335.4. That smooths over some of the volatility, but it also misses the shrinkflation effect entirely because the methodology is supposed to catch it — but imperfectly. So the headline number might be understating the true cost of living increase for everyday consumers. Luna: I've seen this with chocolate bars, cereal boxes, even toilet paper rolls — the diameter shrinks, the sheets get smaller, but the package looks the same. It's almost a psychological game. Lucas: And companies prefer it over raising the price because consumers notice a price hike immediately. A smaller package? Most people don't check the weight or count. They just grab the same box. So shrinkflation allows companies to pass on higher input costs — like coffee beans or cocoa — without triggering consumer backlash. Luna: But eventually, people do notice. There's actually a Twitter account called Shrinkflation that catalogs these changes with side-by-side photos. It's become a kind of grassroots inflation tracker. Lucas: That's what makes this such a rich topic for our show. We've talked about hidden inflation in insurance premiums, in service prices, in corporate margins. But shrinkflation is almost uniquely insidious because it exploits a blind spot in how we measure inflation and how we shop. Luna: And it's not just groceries. Look at household cleaners, paper towels, even over-the-counter medicines. The package gets a 'new look' or 'improved design' and suddenly you're getting 10 percent less product. Lucas: So what can listeners do about it? First, check unit prices. Most stores list the price per ounce or per sheet on the shelf tag. That's your best defense. Second, follow those consumer watchdog accounts or even just take a photo of the package weight next time you buy something — compare it next month. Luna: Yeah, unit pricing is key. But not all stores display it clearly, and sometimes the unit price itself can be misleading if the size changes across brands. Lucas: If our money conversations have helped you think about a decision differently — whether it's spotting shrinkflation at the store or understanding how your savings are eroded — consider supporting the show. It keeps us ad-free and independent. You can find us at buy me a coffee dot com slash fexingo. Luna: Totally. Even a small contribution helps us keep digging into these topics. And we appreciate everyone who listens and shares. Lucas: So, back to shrinkflation. One recent example that caught my eye: a popular brand of Greek yogurt dropped from 5.3 ounces per cup to 4.5 ounces. Same price. That's over a 15 percent reduction. The company cited rising dairy costs. But the packaging — same color, same logo, same size cup — you'd never know unless you flipped it over. Luna: And that's the problem. Most people don't have time to flip every package and do math in their heads. So the market relies on competition to keep companies honest. But when everyone in a category does it — like cereal or snacks — there's no easy substitute. Lucas: That's a great point. And it points to a broader issue: even if the CPI adjusts for package size eventually, the index may underestimate inflation in categories where shrinkflation is rampant, because the adjustment happens with a lag. Over a year, that could mean the true inflation rate is half a percent higher than reported. Luna: Half a percent might not sound like much, but on a $50,000 household budget, that's $250 a year in extra hidden costs. And it compounds across dozens of products. Lucas: Exactly. So while the Fed is looking at core PCE and CPI to decide on rate policy, the lived experience of inflation for many households is shaped by these small, invisible reductions. And that's why we keep coming back to this show — to bridge that gap between the official numbers and what your wallet feels. Luna: Alright, next time you're at the store, look at the unit price. And if you see a product that's shrunk, maybe try a different brand or buy in bulk. Every little bit helps protect your purchasing power. Lucas: Absolutely. Thanks for joining us on Inflation and Your Money with Fexingo. We'll see you next time.