Explained: What Is Shrinkflation And How Does It Impact You As A Consumer

Did you ever notice, sometimes, your favourite brand especially food and beverage reduces the quality, weight or number of the product while maintaining the same price?

If Yes!

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Then read the reason why they do it and how it impacts you as a consumer.

What is Shrinkflation?

Shrinkflation is a form of hidden inflation, which reduces the size of a product while the price of the product remains the same¡ªfor instance, reducing the number of biscuits in a packet with maintaining the same price.

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It is a strategy adopted by companies to maintain their profit margin during inflation.

What leads to shrinkflation?

The rising cost of production including prices of raw materials, labour costs, etc. causes shrinkflation, which reduces producers' profit. Further, intense competition in the market also contributes to shrinkflation.

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Thus, the producers reduce the weight, size or numbers of the product maintaining the price for the profit margin. The average consumer often does not notice a small change in the product.

This is done mainly by the food and beverage industry to maintain its profit margin and also stay stable in this competitive market.

What is the impact of Shrinkflation?

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The strategy tends to deceive the consumers that the product they are buying is not affected by inflation. Although, it could lead to customer frustration and deteriorate the sentiments of consumers toward the producer¡¯s brand.

The risk of turning customers away from a product or brand is also associated once the consumer discovers the changes.

How can be shrinkflation tackled?

Downsizing products is an unfair practice towards consumers. According to The Hindu, the handling of shrinkflation means tackling inflation, which is a complex phenomenon. Thus, especially in India, a mix of macroeconomic policies is required to be introduced to deal with demand and supply and address structural rigidities in the economy.

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Under the Consumer Protection Act, 2019, the consumer has the right to know the quality, quantity, potency, purity, standard, and price of goods in India. Further, a guideline to raise awareness among consumers should be issued by the Central Consumer Protection Authority.

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