Getting less for the same price? Explore how the CPI measures “shrinkflation” and its impact on inflation : Beyond the Numbers: U.S. Bureau of Labor Statistics

By Kari McNair

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You may have noticed recently that you’re going through a roll of paper towels at a faster clip or that there seem to be fewer tortilla chips in the bag. This isn’t your imagination! The concept is known as downsizing or shrinkflation. (We will use the term downsizing in this article.) As input costs increase and costs to create a product rise, companies can increase the list price of a good or they can offer a smaller amount of the product for the same price. So, a candy bar’s size might change from 1.6 ounces to 1.5 ounces, yet the price stays the same. In other words, the price per unit the consumer pays increases as the amount they purchase decreases, while the price they pay at the register remains the same.

Downsizing is common across food and household commodities, including potato chips, paper towels, cereal, cleaning supplies, and candy. Manufacturers change sizes because market research indicates that consumers are more sensitive to price change than size change.1 Downsizing impacts the amount of a good a customer receives; therefore, goods that are sold by a specific unit of weight or volume do not experience downsizing. For example, gasoline or steaks generally do not experience downsizing as they are sold per gallon or per pound. 

BLS makes every effort to capture the changes to product sizes and prices in the Consumer Price Index (CPI) in a timely manner. The CPI is a measure of the average change over time in the prices paid by the urban consumers for a market basket of material goods and services. This Beyond the Numbers article examines product upsizing and downsizing and explores how these concepts affect measurements in the CPI. Read on to find out more about how the CPI captures these changes, which types of products experienced the most change between 2015–21, and its impact on inflation.

Product size change
Do you know how many sheets are on the roll of paper towels you bought or how many ounces of shampoo are in the bottle you usually use? Downsizing is sometimes hard to identify because manufacturers employ a variety of means to reduce package size while keeping the same price. For example, they might add air to the package or increase the divot in the bottom of the jar. When manufacturers change the product size, they sometimes change the packaging colors, materials, or design. By combining size change with new package design, customers may perceive added value to the product experience and may not notice the difference in product amount. Product size change is also not universal within brands, sizes, or flavors. For instance, a manufacturer may downsize a bag of organic gummy bears from 4.5 oz. to 4 oz. while they keep the non-organic gummy bear bag the same size.

Products also experience upsizing, which occurs when a manufacturer increases the package size but keeps the price the same. This can be done to optimize package sizes, reverse a previously downsized item, or consolidate package sizes. Upsizing generally occurs less frequently than downsizing. Upsized products are sometimes advertised on the box as a “bonus buy” or “more for the money.” Bonus buys are different from sale prices or buy one get one (BOGO) deals as product upsizing increases the amount of product in a container instead of selling it at a cheaper price or offering multiple units.
— Read on www.bls.gov/opub/btn/volume-12/measuring-shrinkflation-and-its-impact-on-inflation.htm