The State of 'Shrinkflation': Why Biden called out skimpy bags of potato chips

Alina Selyukh

March 08, 2024 / 10:29 am

caption: Lay's potato chips are on sale at a California grocery store in February 2023.

During his State of the Union address, President Joe Biden reached for one of his top recent peeves: shrinkflation.

"Too many corporations raise prices to pad the profits, charging more and more for less and less," Biden said. He complained about skimpier Snickers bars and added: "The snack companies think you won't notice if they change the size of the bag and put a hell of a lot fewer — same size bag — put fewer chips in it."

Less coffee in a can, more air in a bag of cereal, fewer sheets in a toilet-paper roll — shrinkflation lets higher prices hide in plain sight without instantly shocking shoppers. NPR's Planet Money dubbed it "inflation's devious cousin."

Last year, NPR's research found, for instance, Dove shrunk its soap and Tide shrunk its laundry detergent jugs, while both also slightly raised prices. For shoppers, financial experts recommended considering the price per unit (per ounce or per item in a pack) to assess price changes.

This week, even a beloved blue-haired Sesame Street resident got roped into the growing political debate about the government's role in battling shrinkflation.

"Me hate shrinkflation!" Cookie Monster wrote in on X (formerly Twitter). "Me cookies are getting smaller."

The White House instantly posted in response: "C is for consumers getting ripped off."

Why shrinkflation sticks around

These days, household paper products and snacks get downsized the most, according to the 2023 report by the U.S. Bureau of Labor Statistics. The agency tracks shrinkflation as part of its research on consumer prices.

Overall, shrinkflation affects a small portion of products, government experts found, and manufacturers are downsizing less frequently than they did a decade ago, although the changes can be dramatic.

To explain themselves, companies tend to cite higher costs of making stuff. This could be tariffs on Chinese imports put by the Trump administration, the soaring price of shipping during the pandemic supply-chain crisis, higher wages to attract workers or bad harvests of specific ingredients like cocoa.

Shrinkflation feels particularly painful at a time of high food prices overall. Inflation has cooled significantly, and wages have been climbing faster than prices. But prices are still inching up after inflation hit a four-decade high in 2022. Workers' buying power has yet to fully recover.

And prices get sticky. Historically, it takes longer for companies to lower price tags after hiking them. For months, consumer-goods companies found shoppers grumbling about higher prices, sure, but still buying stuff nonetheless.

But now, some are starting to lose business as more people have begun to walk away from pricier goods. More retailers are talking about "deflation" — actually reducing prices.

Democrats blame "greedflation"

The White House this week launched a "strike force" on pricing, which took aim at junk fees, credit-card late fees and many other costs. Biden is attempting to sway voters, who keep telling pollsters they disapprove of his handling of the economy, despite strong job gains, low unemployment and faster GDP growth than many forecasters had expected.

Bringing up shrinkflation in the State of the Union, the president once again backed a bill by Sen. Bob Casey, D-Penn., that would give more policing power to the Federal Trade Commission and state attorneys general.

A recent report by Casey's office said corporate profits grew more than five times faster than inflation between mid-2020 and mid-2022.

Critics of Biden's war on shrinkflation present it as a new attempt at federal price controls, which historically has often been an ill-fated policy.

"This effort by the Biden Administration to use regulatory agencies to micromanage how private businesses set prices will have the same result: shortages, fewer choices for consumers, a weaker economy, and less jobs," the U.S. Chamber of Commerce's Neil Bradley said about Biden's strike force.

What about potato chips?

Now, on the matter of shrinkflation in potato chips specifically?

One company, Frito-Lay, makes many of the most popular chips: Lay's, Doritos, Cheetos, Fritos, Ruffles, Tostitos, SunChips, Stacey's chips and chip-adjacent Funyuns. The firm is owned by Pepsi.