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How Money Works

Shrinkflation: The Sneaky Price Rise

Ages 10–14 25 min read Beginner

Have you noticed that your favourite chocolate bar seems smaller than it used to be? Or that a "family size" bag of chips seems less... family-sized?

You're not imagining it. It's called shrinkflation — and it's one of the sneakiest tricks companies use to raise prices without you noticing.

What Is Shrinkflation?

Shrinkflation is when companies reduce the size or quantity of a product while keeping the price the same (or even raising it). The result: you pay the same but get less. It's a hidden price increase.

Real Examples in Australia

  • Cadbury Dairy Milk: Reduced from 250g to 200g (20% less) while the price stayed the same. Some blocks then went to 180g.
  • Tim Tams: The number of biscuits per pack has been reduced, with smaller biscuits and larger packaging to disguise the change.
  • Arnott's Shapes: Reduced from 175g to 160g.
  • Coles ice cream: Tubs went from 2 litres to 1.8 litres.
  • Toilet paper: Fewer sheets per roll but "new improved softness!"

Why Do Companies Do This?

When input costs rise (ingredients, packaging, transport, energy), companies have three choices:

  1. Raise the price — customers notice and may switch brands.
  2. Reduce quality — customers notice and complain.
  3. Shrink the product — most customers don't notice.

Option 3 is shrinkflation. It works because humans are better at noticing price changes than quantity changes. A jump from $4.00 to $4.50 is obvious. A drop from 200g to 180g? Most people never check.

Skimpflation: The Cousin

There's also "skimpflation" — where the size stays the same but the quality drops. Cheaper ingredients, thinner material, less durable construction. Same package, same price, worse product.

How to Protect Yourself

Always check the unit price (price per 100g or per litre). Australian law requires supermarkets to display this. If the unit price is rising even when the sticker price isn't, you're experiencing shrinkflation.

Tonight's Question

"Can anyone in the family remember when a favourite product used to be bigger than it is now? How does it feel to know companies do this on purpose?"

The Shrinkflation Detectives

  1. Pick 5 products your family buys regularly.
  2. Check the weight/volume on the package today.
  3. Search online for "original size" or look at old product images.
  4. Calculate the percentage that's been removed.
  5. Using the current price and old size vs new size, calculate the real percentage price increase.
  6. Write a "Shrinkflation Report" and share it at dinner!

Go Further

  • Subreddit: r/shrinkflation documents examples worldwide.
  • Research: Does shrinkflation get included in official inflation statistics? (Partially — the ABS adjusts for quality and quantity changes, but doesn't catch everything.)
  • Question: Is shrinkflation dishonest? Or is it a reasonable business response to rising costs?
  • Investigation: Compare the unit price of the same product at different stores. Who charges more per gram?

What We Simplified

  • Some size changes are genuine reformulation. If a healthier recipe costs more to make, reducing size might be preferable to cutting nutrition.
  • Companies face real cost pressures. Ingredient costs, energy, wages, and transport all rise. Shrinkflation isn't always greed — sometimes it's survival.
  • The ABS does try to account for this. They adjust the CPI for quantity changes, but it's not perfect.

Sources

  • ACCC (2023). "Consumer Issues — Shrinkflation." ACCC
  • ABS. "Consumer Price Index: Concepts, Sources, and Methods." ABS
  • CHOICE Australia. "Shrinkflation: Products That Have Gotten Smaller." CHOICE
  • Economist Intelligence Unit (2023). "Global Food Prices and Shrinkflation." EIU

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