In News

    Companies are resorting to the strategy of Shrinkflation to reduce the impact of rising input costs.


    • Meaning:
      • Downsizing a product while keeping its price the same is called “shrinkflation”
      • It is a combination of the words shrink and inflation.
    • Ways of shrinking:
      • Reducing size,
      • Reducing quantity,
      • Reformulating the products, or
      • Removing ingredients from a product while maintaining the same price.
    • Causes of Shrinkflation
      • Increased Costs making it more expensive for companies to produce their products.
      • Intense competition in the market compelling companies to maintain or reduce their prices.
      • Changing demands from customers which may force companies to reformulate their products which, in turn, can lead to size changes.
    • Benefits:
      • Maintained profits: Downsizing a product reduces costs for manufacturers.
      • More Affordability for customers.
    • Disadvantages:
      • It is an unfair practice for consumers.
      • Loss of trust if companies do not properly communicate with their consumers.

    Source: WEF