Shrinkflation - More transparency for hidden price increases

We have probably all experienced this when shopping, but some of us may have not noticed: the content of a package has shrunk, but its price has not. According to consumer advice centres, manufacturers are increasingly driving up the prices of their products by selling the same familiar filling quantity with less content, without disclosing this. Since this summer, France and Hungary are combatting this practice, known as “shrinkflation”, and legally obligating supermarkets to indicate it. 

The Stiftung Warentest product testing foundation published a little brain teaser on its website: a bag of crisps costs 1.79 euros. The supplier makes the crisps 17 percent more expensive, but without changing the price. How does it do that? Answer: the bag contains 25 grammes less crisps. The term for these hidden price changes is shrinkflation, or hidden inflation. It is a portmanteau of “to shrink” and “inflation”. This shrinkage is hardly noticeable when you do your everyday shopping. Only if you look very closely and compare prices and sizes, you might notice the new filling quantity on the package.

In 2023 the Hamburg consumer advice centre in Germany reported a new record number of complaints about shrinkflation. For instance, a package of Suchard Express brand cocoa powder shrunk from 500 to 400 grammes, which means that its price has increased by 25 percent. Milka and Oreo brand ice lollies not only removed one product from their boxes, but also reduced the weight of each lolly. This corresponds to a respective price increase of 48 and 63 percent. Duschdas Sport shower gel contained less product and was thus 22 percent more expensive. And Zentis increased the price for its “Belmandel” almond nougat spread from 2.19 to 2.89 euros. However, a glass now only contains 300 grammes instead of 400. This makes for a double price increase of 76 percent overall.

According to the Hamburg consumer advice centre, this trend began as early as 2022: the number of confirmed cases almost doubled between the first and second half of that year. And while the hidden price increase mainly used to occur with traditional brands, it has now spread to discount supermarket chains and organic brands as well. Although the manufacturers' practices are generally not illegal, they show an extreme disregard for transparency.

France is now combatting hidden price increases and has legally obligated supermarkets to notify consumers of any changes in product content using signs on shelves as of the beginning of July. This is meant to increase the visibility of shrinkflation over a duration of two months, regardless of whether the products are national or international branded products or trademarks. The new law applies only to shops with a sales area of more than 400 square metres.

Carrefour, the second-largest retail business in Europe after the Schwarz Group, had already anticipated the law by installing signs indicating packages with reduced content last autumn. At the same time, the company announced that it wanted to renegotiate the price for the affected products. This affected products by PepsiCo, Nestlé, Unilever and Lindt & Sprüngli, to name just a few. 

The French government set in motion its regulations on indicating shrinkflation, also known as réduflation (a portmanteau of réduction and inflation) in France, during last year’s high inflation period when many consumers complained about high food prices and also felt duped by reduced package sizes. Food prices in particular had become a major political issue in France and the law is seen as a reaction to this.

In Hungary, retailers with a certain level of turnover (more than 1 billion forints = approx. 2.5 million euros) have had to indicate products using a similar warning since the beginning of March 2024 if their weight or volume has been reduced but the price has remained the same. As in France, changes have to be indicated on signs affixed to shelves. The weight or volume of the same product between 1 January 2020 and 1 July 2023 serves as the reference value. Retailers must provide the information for two months from the date on which they begin selling the product in the reduced size. The law also obligates manufacturers to inform retailers about all changes in product size. The Hungarian National Food Chain Safety Office (Nébih) has also provided this information to consumers in the form of a public database. Hundreds of products have already been uploaded here. According to the Hungarian Ministry for National Economy, 80 percent of these are food products and the remainder are mainly cosmetic and household products.