Shrinkflation:UPSC Daily Important Topic | 29 June 2022

Shrinkflation

Shrinkflation is the practice of reducing the size of a product while the price of the product remains the same. So, this effectively increases the price per amount or per unit or per kg.

For example, recently ‘Parle G’ Biscuits size (quantity) was reduced slightly retaining the same price of Rs. 5.

Raising the price per given amount is a strategy employed by companies, mainly in the food and beverage industries, to stealthily boost profit margins or maintain profit margin in the face of rising input costs.

As you all know that inflation has increased in the last few months and so companies cost of production/input cost has also increased, but rather than increasing the prices companies have started reducing pack sizes just to disguise the price rise.