What is shrinkflation? How to avoid paying more for less
Milka bars have been getting smaller, but cost the same. And there’s a word for that: shrinkflation. We’ll help you understand this phenomenon, and what you can do to avoid paying more for less.
5 min read
You might have noticed your weekly grocery shopping getting more and more expensive. But who’s to blame for the rising prices? Many are predicting a recession, while the inflation rate just keeps on climbing. In Germany, for example, Destatis put inflation at +10.4% in October 2022, its highest rate since the German reunification in 1990. According to Statista, as of October 2022, the inflation rate was 11.5% in the EU. And there’s more: In addition to the rising inflation rates and upcoming recession, shrinkflation is also making your trips to the supermarket more expensive. Here, we’ll explain what shrinkflation is, and what you can do to avoid its worst impacts.
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Shrinkflation is a combination of the words shrink and inflation, referring to the process of reducing the size or quantity of products, while maintaining (or even increasing) prices. The term was coined by British economist Pippa Malmgren in 2015.Simply put, shrinkflation means getting smaller quantities while paying the same prices as before. It might also include product reformulations or quality reductions to make product manufacturing cheaper. For the consumer, that means that the price per weight increases—although that's not always immediately obvious while shopping.Think about the Milka bar of your childhood. Does it seem like it's gotten a lot smaller than it was before? That's shrinkflation for you.
Shrinkflation in practice
Before 2017, a bar of Milka Alpine Milk weighed 300g. Let's say it used to cost €1. After 2017, however, it was subject to shrinkflation. The weight was reduced to 270g, but you still paid €1 for it. That's a 10% decrease in weight for the same price—which ultimately means you are paying 10% more for the same chocolate bar.
Why do companies use shrinkflation?
By decreasing the volume but keeping the previous price, companies can increase their profits while maintaining sales volume and reducing costs. This tactic is used as an alternative to raising prices to keep up with inflation rates.While shrinkflation might not directly increase the total of your supermarket basket, it will affect the price per weight—which indirectly means that you, as a consumer, are getting less for your money.
Is shrinkflation legal?
As a consumer, shrinkflation feels like a trap—and thus, many consumer protection groups are critical of it. However, within limits, the practice of it is legal. Consumers can rely on the Section 5 Act against Unfair Competition and the Section 43(2) Measurement and Calibration Act, to protect them. These articles state that deceptive packaging might mean communicating misleading information to consumers, which is illegal: Brands should not suggest that the packaging contains more than it actually does. But as long as the quantity is clearly labeled, that suggestion remains subjective.As a consumer, you're not helpless, though. Check out our article on how to start saving money on your grocery shopping to learn a few helpful tips, and keep reading to find out what you can do to avoid shrinkflation.
How to avoid shrinkflation
At times, shrinkflation will seem unavoidable. But that's not always the case! Whether you're living on a budget or not, the following tips will help you avoid being caught by shrinkflation—and get more for your money again.Let's start with the basics:
1. Check the price per weight
You might not know how much your Milka bar weighed in 2015, and you probably wouldn't know if it got smaller just by looking at the supermarket shelves—especially if the price stayed the same.Instead of making simple price-based decisions, then, pay attention to the price per weight. In Germany, you will usually find that information below the regular price tag, in smaller numbers that usually say, for example, 100g = €0.56 or 1kg = €2.05. The price per weight will indicate which products are actually cheaper—and you won't have to rely on your memory to see if they've been affected by shrinkflation or not.
2. Look for generic or non-branded alternatives
According to a Morning Consult's poll, consumers usually notice shrinkflation affecting snacks, frozen foods, bread and pastries, meat, and pantry items such as flour and beans. And what are they doing about it?
49% of consumers purchased a different brand
48% say they opted for a generic brand
This is something you can do, too. Avoid getting taken by shrinkflation by looking for generic or discounted brands. In Germany, these generic brands are called "Gut und Günstig" (Edeka) and "JA!" (Rewe). Alternatively, you can also check out discount supermarkets such as Aldi, Lidl, Netto, and Penny to save some money on your grocery shopping.That's not to say that generic alternatives or discount supermarkets aren’t subject to shrinkflation—but as they are usually cheaper, at least you're already paying less!
3. Buy in bulk
The same Morning Consult poll reported that 33% of consumers chose to buy in bulk to avoid being hit by shrinkflation. It’s worth asking yourself: Is that something you can do too? Generally speaking, buying in bulk doesn't involve excessive packaging—which means charging less money for the products. You'll usually have a say in the amount you're buying too, which makes it easier to control your spending.In Germany, bulk stores include Selgros, Handelshof, Metro, and Globus. Most of these, however, will require you to have a membership card and a commercial tax ID.
Your money at N26
Shrinkflation or not, savings are always an important part of the budget to consider. Learn more tips about managing your finances as a single individual or as a family. If you’re serious about saving, our bank account has got you covered. Not only can you set daily spending limits that help you stay within budget, but you’ll also receive push notifications each time a transaction takes place in your account.Pair this with Spaces, which allows you to create multiple sub-accounts with specific budgeting targets, and our Insights feature, which categorizes your spending habits. You’ll be reaching your savings goals in no time!
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