By JOSH BOAK (Associated Press)
WASHINGTON (AP) — President Joe Biden is fully committed to calling out 'shrinkflation.'
The term refers to a somewhat sneaky way for companies to raise prices by subtly reducing the size of their products . Suddenly, there are fewer pretzels in the bag, less toothpaste in the tube, and shorter candy bars.“It’s called shrinkflation,” Biden mentioned in his State of the Union speech on Thursday night. “You pay the same amount and get about, I don’t know, 10% fewer Snickers in it.”
The president’s focus on shrinkflation is part of a broader strategy to change how voters perceive the economy
before the November election. Biden is trying to shift attention away from high prices and instead blame big businesses. He also aims to show ordinary people that he's fighting for them as he tries to convince the public that the economy has improved under his leadership.
He discussed the issue of shrinkflation in a video released on Super Bowl Sunday and highlighted a social media post by the “Sesame Street” character Cookie Monster complaining about smaller cookies. The country’s low 3.7% unemployment rate and a record 16 million applications to start new businesses have mostly been ignored by voters, who are focused on higher grocery and housing prices after inflation hit a four-decade high in June 2022 at 9.1%. Even as inflation has decreased to 3.1% annually, shoppers are still concerned about paying more at supermarkets. “Joe Biden knows that high grocery prices are a significant political vulnerability,” said Ryan Bourne, an economist at the Cato Institute, a libertarian think tank. “When consumers go into the grocery store, they remember that they're paying more than they did in 2019.”
But Bourne cautioned that, alternatively, companies may have simply increased their prices without shrinkflation, which could have upset consumers more and harmed the president’s approval on the issue. Only 34% of U.S. adults say they agree with how Biden has handled the economy, according to polling by The Associated Press-NORC Center for Public Affairs Research.
“A number of companies did that because they thought that their customers would prefer it to paying higher headline prices,” Bourne stated. “So I think the president should be very careful what he wishes for when he says he thinks shrinkflation is unfair.”
Sen. Katie Britt, R-Alabama, delivered the GOP response to the State of the Union and blamed Biden alone for the inflation.
“His reckless spending put our economy in a difficult situation and caused the cost of living to skyrocket — the worst inflation in 40 years,” Britt claimed.
Republicans have asserted that prices rose because of Biden’s $1.9 trillion pandemic relief package, even though the price increases were also global in nature. This shows that broken supply chains and higher energy and food prices after Russia’s invasion of Ukraine played a role.
In a report released on Wednesday, the liberal economic advocacy group Groundwork Collaborative examined the inflation numbers from the Bureau of Labor Statistics and found evidence of shrinkflation, suggesting it has had a modest but meaningful impact on higher prices since 2019.
More than 7% of the rise in coffee prices was due to reduced packaging. Approximately 10% of the increased prices for snacks and household paper products were a result of shrinkflation. As for a president who enjoys ice cream, around 7% of the inflation for that product can be attributed to shrinkflation.
The report mentioned that companies may have hidden the price increases from customers, but they were honest with investors during earnings calls. Some companies, like General Mills, also described the reduced package sizes as a method to control their own expenses and tackle the challenge of climate change.
According to the report, the snack company Utz decreased the size of its potato chip bags by half an ounce to 9 ounces. They also removed two ounces of pretzels from their pretzel jars, with the CEO promoting this as their ability to manage what the industry refers to as “price pack architecture.” PepsiCo also reduced the size of its Frito Scoops bags, Gatorade bottles, and Doritos bags.
Linsday Owens, executive director of the Groundwork Collaborative, remarked, “The reason we’re seeing it now is because shrinkflation is a late-stage ‘greedflation’ — when you’ve pushed prices as far as possible and consumers can’t handle another increase. It’s much more misleading than a simple price hike.
Sen. Bob Casey, D-Pennsylvania, has proposed a bill that would prohibit shrinkflation by directing the Federal Trade Commission to consider it an unfair or deceptive practice. This would enable the government to seek legal action against companies that engage in shrinkflation.
Biden expressed strong support for the proposal in his speech.
“Pass Bobby Casey’s bill and stop this,” he said.
The president’s attention to shrinkflation is part of a broader effort to change how voters perceive the economy leading up to the November election.
Biden gave the measure a full endorsement in his speech.
“Pass Bobby Casey’s bill and stop this,” he said.
