Shrinkflation

You have heard of inflation, deflation, and stagflation. Recently, you may have noticed shrinkflation. Due to rising costs of raw materials and labor, producers have begun to shrink package sizes. For example, ice cream maker Tillamook announced that it was shrinking the size of its cartons from 56 oz to 48 oz, a 14 percent shrinkage. Since consumers tend to look at price rather than package size, the move is intended to keep sales constant. Of course, shrinkflation is really inflation in another guise. In fact, the United Nations FAO Food Price Index make its biggest leap since October 2010, and reached its highest level since September 2011. Shrinkflation is not a new phenomenon, but it is an indication of rising inflation.