Shrinkflation – Real Inflation Much Higher Than Reported

  • Shrinkflation - Real inflation much higher than reported and realised
  • Shrinkflation is taking hold in consumer sector
  • Important consumer, financial, monetary and economic issue being largely ignored by financial analysts, financial advisers, economists, central banks and the media.
  • Food becoming more expensive as consumers get less for price paid
  • A form of stealth inflation, few can avoid it
  • Brexit is the scapegoat for shrinkflation by the media and companies
  • Consumers blame retailers rather than central banks
  • Gold hedge has doubled in value since 2007 

Editor: Mark O'Byrne

Shrinkflation: no one left untouched

600 new words entered our official lexicon this week as the Oxford English Dictionary announced the latest new additions to their online records.

One of the words reportedly up for consideration was shrinkflation. It did not make the final cut and as a result continues to be defined by the authority as ‘portmanteau, made from combining shrink: ‘to become or make smaller in size’, with the economic sense of inflation: ‘a general increase in prices and fall in the purchasing value of money’.

In order for a word to be accepted into the OED it must have been in use for at least five years. But the latest list suggests that this isn’t the case and exceptions can be made. The inclusion of ‘superbrat’, a word which is usually associated with the behaviour of John McEnroe in the 1970s, actually dates back to the the 1950s.

Yet, shrinkflation continues to elude the world’s authority on the English language. This seems bizarre to us given both the word and the phenomenon and something consumers have been experiencing for a number of years.

Although it is understandable in the context of an important consumer, financial and economic issue which is being largely ignored by financial analysts, financial advisers, economists and the media.

We first covered the shrinkflation phenomenon back in 2014 when we reported how  Dr. Philippa Malmgren had highlighted this ‘shrinkflation’ trend in a new book.

Shrinkflation: a new phenomenon?

As we mentioned last week, shrinkflation is a phenomenon that is not unique to the current financial crisis. In 1916 The Seattle Star ran a front-page story on the issue, ‘“[Inspectors] went from bakery to bakery Thursday checking up on the bread situation…And here is what they found: ten-cent loaves of bread have shrunk from 32 ounces to 22 ounces, and standard 5-cent loaves, that used to weigh 16 ounces, now average 11 ounces.”

Search Graph for Shrinkflation (Google)

Granted, back in 1916 the word ‘shrinkflation’ was not in use but it had a place firmly in the economy. Use of the word shrinkflation has been picking up pace since at least 2012. We can see this by the examining the search history for the phrase on Google.

You can clearly see a peak in the search for the term in November 2016. It was at this point when news of the newly designed Toblerone hit the British newspapers. Mondelez, Toblerone’s manufacturers had announced they would be reducing the bars from 170 grams to 150 grams in the UK which would affect the shape.

Mondelez’s justification for the change was due to an uptick in ‘many ingredients’ prices’, the company specifically blamed the drop of the euro against the Swiss franc in January, and an increase in cocoa prices over the last three years.

Cocoa Prices - Money Week

It’s not just Toblerone fans who are feeling the pinch on chocolate bars. Creme Eggs and Quality Street (other British high street favourites) have been shrinking, with price remaining the same.

Other household items and food prices have also been affected.

Brexit is the scapegoat

Even though we can go back nearly 100 years to witness shrinkflation and see evidence of it in our household items and online searches, it is only in the last year that manufacturers and the media have managed to find a reason for its existence.

Brexit is being blamed - as it is being blamed for a number of woes being experienced in the UK at present.

Brexit seems to be bearing the brunt of the blame for the recent shrinkages, thanks to the impact of the referendum of the price of sterling. You don’t need to have a PhD in economics to understand the effect this has on prices.

12 months since the vote sterling is still weak, it is 15% down against the US dollar, and 14% against the euro. Things are expected to get worse, with HSBC analysts expecting the pound to hit parity with the euro by the end of the year.

There is little doubt that a weak currency will impact the cost of raw goods and materials which make up chocolate bars and other items. However shrinkflation existed even when the pound was strong.

No sign of easing up

In 2015 the Irish Times reported on this very topic and referred to a 2014 Which? survey:

Aunt Bessie’s Homestyle Chips were reduced in size from 750g to 700g, while a box of Surf with Essential Oils washing powder fell in size from 2kg to 1.61kg. In 2014 there was 750g of mixed vegetables in a Birds Eye Select bag; today it is 690g. Cif Actifizz Multi-Purpose Lemon Spray and Domestos Spray Bleach Multipurpose Cleaner were reduced in size from 750ml last year to 700ml today…

‘The shrinkage does not end there. In previous years, Which? has recorded one- litre tubs of Carte D’Or ice cream turning into 900ml tubs, while a litre of Innocent smoothies became 900ml. Magnum ice creams, which used to be 360ml, are now 330ml, and the size of a bar of Imperial Leather soap fell from 125g to 100g, a reduction of 20 per cent…

‘The list goes on. A packet of 48 Persil washing tablets turned into a packet of 40, a decline of 16.6 per cent, while 56 Pampers Baby Wipes used to be a packet of 63, an 11.1 per cent reduction.’

This was well before the EU referendum. It was impossible to blame a weak currency, instead this was and remains all about the impact of real inflation on consumer prices. This is despite having been told for years that inflation was very low.

UK Inflation Expectations (FT)

Inflation expectations are relatively low amongst households in the UK, EU and U.S.

Only now are we beginning to see both officials and individuals wake up to the presence of inflation in the UK. In May consumer prices accelerated faster than BoE expectations. They hit a four-year high of 2.9% and are expected to exceed 3% in the coming months.

In the UK, there are some concerns and dissent has increased in the BoE’s monetary policy committee (MPC) over the suitability of its record low interest rate policy in regard to rising inflationary pressures. It has been some time since we have seen any sign of concern regarding inflationary issues, from members of the MPC.

Meanwhile in households it looks like it has taken the appearance of a chocolate bar to drive the message home that businesses are experiencing price pressures. Unfortunately this has merely come out as anger towards companies rather than the central banks and governments who are ultimately responsible for this inflationary issue.

Unjust for consumers or time to take responsibility?

Which? magazine and consumer action groups have tried to bring retailers to account for what are considered to be misleading practices.

In Ireland, the Consumer Association’s Chief Executive stated

“I don’t know if we can say consumers are being deliberately misled but they are being put in a position where it becomes very difficult to make informed decisions."

“I think the worst example of this is the widespread shrinking of products. The content gets smaller but the price and the packaging stays the same. These are price increases by stealth, and by any measure inflation of this nature is abnormal in the current environment. I think they are appalling.”

As we have seen with quantitative easing, bank bailouts and the overall financial crisis consumers seem to be relatively disinterested in fighting back against these practices that ultimately cost them more.

A YouGov survey found that 46 per cent those polled would prefer to pay more for an item than see it shrink. Yet 36 per cent said they'd be satisfied if the pack got smaller, but the price stayed the same.

The same survey run by YouGov Portion Sizes and Health found that firms risk losing over a third of their customer base if they cut pack sizes by 15 per cent.

While there is uproar on Facebook pages about this topic, the concerns of some consumers are not being voiced by politicians, economists, central bankers or the media.

Depite the zeitgeist of the moment, this isn’t about retailers taking advantage of consumers. Shrinkflation is a very serious byproduct of a practice which has been going on for many years now.

Shrinkflation is just inflation in stealth mode and is the consequence of currency debasement on a scale that the world has never seen before.

It brings the economy’s problems literally to the kitchen table.

We are finally at a point where those who have so far been apparently untouched by the financial crisis i.e. the middle classes who still have jobs, they have seen their homes increase in value and they still go abroad twice a year, are beginning to see their cost of living increase.

As are the working classes, pensioners and those on low salaries or fixed incomes.

They will soon recognise that no one is left unharmed by the monetary and economic policies which followed the financial crisis.

Easy monetary policy is wealth ignorant. It gives little regard to how you spend your money and where you hold your cash. That’s why savers have to make room for those real assets which cannot be shrunk down and magicked away.

Investments such as gold and silver by their very nature are immune to the shrinkflation effect and are an important hedge against it.

Next time you’re considering that bar of Toblerone at the supermarket checkout, just imagine how much is missing compared to when you would have bought with the proceeds of your first payslip.

Then consider how much a bar of gold would have changed since then, the fact is that it hasn't. You would still have the same sized bar, with the same gold content and it is worth a lot more now.

Gold in USD - 10 Years

Gold is twice the price it was before the crisis in 2007. While many household goods and products are higher in price or the same price but a much smaller size.

Shrinkflation is happening and real inflation is much higher than is being reported or people realise.

Your purchasing power and your wealth can be preserved from the ravages of shrinkflation, just don’t expect it to happen courtesy of central banks and governments.

News and Commentary

Gold prices firm on weaker dollar, equities (Reuters)

Ransomware virus hits computer servers across Europe (Bloomberg)

Not another financial crisis in ‘our lifetimes’: Fed’s Yellen (Reuters)

UK consumer confidence plunges after May's election flop (Reuters)

75% of London homes now selling below asking price (City A.M. )

Bloomberg Image

Markets Have Nothing Left to Fear But Fearlessness Itself (Reuters)

Real reason central bankers don’t want to raise interest rates (Moneyweek)

Brexit One Year Later, in Five Charts (Goldseek)

London's Palladium Market's Metal Shortage, Structure, and Irregular Appearance (Safe Haven)

Why Institutional Investors Are Buying Gold Again (Goldseek)

Gold Summer Doldrums (

Gold Prices (LBMA AM)

28 Jun: USD 1,251.60, GBP 976.25 & EUR 1,101.91 per ounce
27 Jun: USD 1,250.40, GBP 980.31 & EUR 1,111.36 per ounce
26 Jun: USD 1,240.85, GBP 975.56 & EUR 1,109.32 per ounce
23 Jun: USD 1,256.30, GBP 987.70 & EUR 1,125.27 per ounce
22 Jun: USD 1,251.40, GBP 988.36 & EUR 1,120.13 per ounce
21 Jun: USD 1,247.05, GBP 989.04 & EUR 1,118.98 per ounce
20 Jun: USD 1,246.50, GBP 981.99 & EUR 1,117.24 per ounce

Silver Prices (LBMA)

28 Jun: USD 16.78, GBP 13.08 & EUR 14.78 per ounce
27 Jun: USD 16.66, GBP 13.07 & EUR 14.79 per ounce
26 Jun: USD 16.53, GBP 12.98 & EUR 14.79 per ounce
23 Jun: USD 16.71, GBP 13.12 & EUR 14.97 per ounce
22 Jun: USD 16.58, GBP 13.09 & EUR 14.85 per ounce
21 Jun: USD 16.51, GBP 13.03 & EUR 14.81 per ounce
20 Jun: USD 16.59, GBP 13.10 & EUR 14.88 per ounce

Recent Market Updates

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Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

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Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.


Kayman Wed, 06/28/2017 - 19:21 Permalink

Governments always lie. A small lie, a bare-faced lie, or "watchgonnadoaboutit" lie.Shrinkage of amounts in the denominator of the equation has been running rampant.But using the Hedonistic yardstick, that one bite of your Mars bar gives you the same thrill as 6 bites previously-   ask any government statistician.

GUS100CORRINA Wed, 06/28/2017 - 19:27 Permalink

SHRINKFLATION  ... I have been talking about this for YEARS!!!!Let me give you another example outside of candy.Walgreens used to have buy one and get one free all of the time for all kinds of items. Now the new deal is buy one and get the second at 50% off!!!Think for a moment what just happened in this transaction. You just saw 33% inflation in that single transaction!!!! So forget about the MARS bar example. The MARS bar example was minor compared to deal inflation. Also, in some cases, there was also SHRINKINFLATION along with the deal inflation.UNBELIEVABLE!!!

Caleb Abell (not verified) Wed, 06/28/2017 - 19:59 Permalink

Everyone knows this has been going on for years.  By lying about inflation, the government can cheat the pensioners a little each year by eliminating COLA raises.

Give Me Some Truth Caleb Abell (not verified) Thu, 06/29/2017 - 07:38 Permalink

I think this is one of the main reasons they lie about inflation. If the "real" inflation rate was utilized, the government would go broke (or broker) from the rising COLAS. Also, the bogus (and lower) inflation rate means the Gross Domestic Product is higher than it would be otherwise. Adjusted for (real) inflation, GDP would be lower, probably negative, perhaps very negative - which would mean we never came out of the Great Recession and/or are in a recession/Depression today.All of these unpleasant truths can be avoided if they simply don't become "truths." Rigging economic data is one of the most important things the Powers that Be do.The fact the press doesn't call them on it ensures that real news (and facts) never get published. Fake News is presented. Real news is concealed.

In reply to by Caleb Abell (not verified)

Radical Pragmatist Wed, 06/28/2017 - 21:15 Permalink

Just buy "real" food, not packaged processed crap.  A dozen eggs is a 12 eggs, not 10.5 eggs.  A pound of ham is a pound of ham, not 12.5 ounces of ham.P.S. Of course this consumer fraud is more of the last heave, clutching asmatic gasp of the Cronies as they wheeze and parasitically extract the last morsels from the rotting corpse that is America.P.P.S. But we'll always have the Merchants of Death exporting their vulgar destruction across the globe.  Greased by the Beltway Elites...

mary mary Wed, 06/28/2017 - 21:04 Permalink

After 50 years, my credit union just out letters saying they're going to charge $7 a month for checking accounts.  Oh, well.  Now I have to go through a bunch of hoops to move the checking account to my brokerage, which as yet charges no fees, as well as no cost for the actual checks.  Sad to part ways.  I'm telling myself the credit union fell prey to inflation.  Of course, it might also be partly due to them building themselves a new Taj Mahal office building a couple years ago....  "And all was vanity."P.S.  Electrical power bill way up.  Internet bill way up.  City utilities bill holding on....P.P.S.  I don't get it with electrical utilities.  I would think that, like computer manufacturers, they would be able to get more efficient every year.  But since they have a State-granted monopoly, I guess they can get less efficient every year....  Without competition, there is no freedom.

Jimmy Jimmereeno mary mary Wed, 06/28/2017 - 21:39 Permalink

Consider your circumstance a gift from the gods and get out while the getting is good.  As a depositor, you are an owner of the financial co-op.Have you ever looked at its annual reports?  My bet is that you will find the bulk of its "assets" are automobile loans.  Guess what's going to happen to fcu balance sheets as the USA auto market and auto loan structure implodes?

In reply to by mary mary

mary mary Jimmy Jimmereeno Wed, 06/28/2017 - 23:59 Permalink

Thanks. I think you are 100%: auto loans.  Maybe those loans are starting to lose money.  I will indeed, just out of curiosity, ask about the annual reports, which I have not ever looked at.  I understand I am a part owner of the credit union.  I thought I was being helpful by being a checking account customer, but my brokerage really makes more sense, is cheaper, and is much more diversified and therefore, I hope and think, is financially stronger.

In reply to by Jimmy Jimmereeno

Anon2017 mary mary Wed, 06/28/2017 - 22:13 Permalink

Your rising electricity rates are subsidizing solar panels, low income households, nuclear decommissioning, subsidies for energy efficient products and in Northern California, the costs related to the electricity crisis in 2000(?). For a very brief time, there was "competition" in the local electricity market, but wholesalers like Enron gamed the system. Enron went bankrupt and some of its senior executives went to prison. Its Chairman, Ken Lay, had a heart attack and died at age 64 before he could start his prison sentence.  I cut my Internet and phone bill significantly a few years ago when I dropped AT&T and went with a much smaller local provider.If you are still paying $6.95 or more for an online stock trade, do know that you can do better. Shop around. If you have a sizeable account ask about new account bonuses.    

In reply to by mary mary

pine_marten Wed, 06/28/2017 - 21:58 Permalink

So we used to buy Levis - now we buy Dickies.  We got plenty of belt tighten left in America. We eat pork instead of beef. We by used cars instead of new. We drink Pabst stead of Heineken. We pull that rotten molar with a vise grip. Fuck you Yellen

ebworthen Wed, 06/28/2017 - 22:10 Permalink

Canned good, Coffee, Ice Cream, 12 oz. "pound" of Bacon, etc. all shrinking.They will be selling a "Baker's Dozen" of eggs 'ere long, wait for it; "Less Cholesterol!  Better Eggs!"They'll give you two plastic Easter eggs in the "Dozen" pack with a chance to win Lipitor for a year, you know they will!

Give Me Some Truth Wed, 06/28/2017 - 22:12 Permalink

The wide-spread prevalence of "shrinkflation" IS a big story that has largely not been reported (kudos to ZH for publicizing it) by the MSM. It's important because it shows that prices are rising far more than "very low" inflation would dictate. In other words, rampant shrinklation shows that the meme that "inflation is contained" is fake news. Real news sources should and would report this and do more investigations to document it.BTW, "substitution" is just as prevalent as "shrinkflation" and also gets scant press attention. Cheaper products are being substituted to compensate for rising prices. This is why many popular food brands now taste different (worse). This article does a good job of pointing out that central bank and government policies actually are to blame for this trend.

Give Me Some Truth Anon2017 Wed, 06/28/2017 - 22:45 Permalink

Yep. Inflation is a constant. I think the efforts to conceal it are becoming far more noticeable today. Marketers of products would simply keep raising prices if they thought they could do that. They must have concluded that they can't and so they have gone to shrinkflation and substitution in a more conspicuous way."Sound money" proponents like Ron Paul argue that ever-rising prices does not have to be the natural order. He/They say that greater efficiency, better techniques, etc. should result in prices declining. This happens of course in new products where the price comes down over time (think calculators, HD TVs, etc.) but not in most products and services. It should or could. Again, blame money-printing and flawed government policies.

In reply to by Anon2017

Give Me Some Truth Wed, 06/28/2017 - 22:39 Permalink

"Shrinkflation" can be seen in the newspaper business in at least two ways. The size of a newspaper page has shrunk significantly in recent decades. So you now literally get fewer stories and shorter stories. Also, the page counts of newspapers (and magazines) have fallen dramatically.But the price of a newspaper at the newstand has gone UP. You/We pay More for less product ("news").Yet editors and publishers still sell the  BS "inflation is low" storyline.

Give Me Some Truth Anon2017 Wed, 06/28/2017 - 22:42 Permalink

Newspapers  screwed the pooch when they gave away their product (news content) for free. The publishers thought they would make up in Internet ads what they might lose in circulation revenue and print ads. They were wrong.Nobody likes the press, but actually we could use them more than ever. If they simply did the job they were supposed to. All of the down-sizing in the industry makes it even less likely that the press will be able to perform its "watchdog" role (even if they wanted to, which they apparently don't).

In reply to by Anon2017

JamesBond Wed, 06/28/2017 - 22:30 Permalink

This has been happening in Japan for nearly two decades; it began when they entered recession and then depression.  There is a direct connection.  

lake Thu, 06/29/2017 - 06:47 Permalink

One way to harm all of us is to make food a weapon. So far they've turned many of our foods into poison. Making decent food too expensive or unavailable is another way. We have indoor and outdoor potted plants and, when things get worse, we'll have as many as we can fit here, indoors and outdoors.When America looks like Venezuela, having your own indoor garden will be a big help.

NoWayJose Thu, 06/29/2017 - 07:41 Permalink

Happy to still have a couple packs of 4.5 inch wide Charmin that I stashed many years ago - at much lower prices. I could have put that same money in the bank and made $1.20 in interest - but instead I get to wipe with toilet paper that does not resemble an adding machine tape, and that $1.20 in interest does not come close to covering the shelf price increase on the new 3.9 inch wide paper.

Best investment seems to be to stock up on things that 'keep' - like trash bags, TP, etc - whenever you see a good sale price.

bagpiper Thu, 06/29/2017 - 08:35 Permalink

I wish I could post a picture of my flock of chicks. It is a thrill to see the little things hatch out of eggs after mama sits on 'em for 21 days.  21 days and I got 15 new meals/egg producers... totally natural! No GMO required!Kraft, on the other hand has lost my business forever. Why? Well, it ain't just the amount of food in the package, tis the amount of plastic IN the food... trust me on this. I was a manager at a Fortune 100 Big Pharma company(now absorbed), and I've also been cooking for 40+ years, and Kraft american singles have always melted into my tomato 'n cheese sauce... but now? Blobs. Little plastic plastic so called 'cheese' blobs. No matter how long its heated, all you get is a plastic mess.This is one of those "whatchagonnadoaboutitpunk" lies of corporations, that have now been taken over by profit seeking youngun's, who have no ethics or religion, no moral foundation and will do just about anything to increase profit by a fraction of a penny. Just like other brands who's product no longer tastes like the oriignal, 'new and improved'! Yeah, and they lose business and wonder why... I pray, it all falls down into collapse, because, it needs to, we are destroying the Earth. Monsanto is killing all the farm fields around here, they used to be green, all the time, now everything is dead, oh, except for their GMO crap. They are killing nature, fuck 'em all, let 'em die die die. This is why civilizations rise and fall, the builders build, the children come, apathy sets in, and then degeneration. Management fads, and schools, need to be razed to the ground.You don't know what you're eating...  but, Borden now has my cheese business, glad I'm old.I'm just sad for you children.