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Protect Your Wallet: Combatting Shrinkflation and Skimpflation


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"Shrinkflation" has once again become a topic of widespread discussion, particularly since its reference in the latest State of the Union address. You're probably familiar with the strategy by now: manufacturers reduce the size or quantity of a product while maintaining its price. But have you heard of its sneakier counterpart, "skimpflation"? Instead of cutting the quantity in products, businesses have been cutting back on the quality and availability of their services, while keeping prices steady. This concept is harder to detect because quality is tough to measure, and these changes are seldom communicated to the public. Both, however, present challenges for consumers. So how do you spot it and what can you do to safeguard your wallet against these tactics?

Shrinkflation and Skimpflation Defined

Shrinkflation is a tactic employed by manufacturers to maintain profit margins amidst rising production costs. It involves reducing the size or quantity of a product while keeping its price unchanged. For instance, that favorite chocolate bar you love may suddenly weigh a few grams lighter while costing the same.

Skimpflation, on the other hand, pertains to a decrease in service quality or availability without a corresponding reduction in prices. Unlike shrinkflation, which manifests physically through smaller product sizes, skimpflation is more nuanced and challenging to detect. Airlines reducing legroom, hotels offering fewer amenities, and customer support wait times are common examples of skimpflation.

Detecting Shrinking and Skimping

Chances are high you'll see examples of shrinkflation at the drugstore and supermarket but it's likely you've seen it in restaurants too. In the supermarket, your go-to bag of chips may have more air added to the package or the divot in the bottom of the salsa jar has gotten bigger. Alterations in product size are often also accompanied by changes in packaging colors, materials, or design.

Skimpflation is trickier to detect as it involves qualitative changes rather than quantitative ones. Service is the biggest area where this can be seen. If you've stayed in a hotel recently, maybe you've noticed the room cleaning service is every other day or you have to request it if you want your room cleaned before you check out. Or maybe the hot complimentary breakfast buffet has been replaced by prepackaged sweet rolls and cereal. But skimpflation can also be seen in the grocery store, as some manufacturers have changed their formulas in food products to now include cheaper ingredients than before.

How to Fight Back Against Shrinkflation and Skimpflation

Price Awareness

Stay vigilant about price changes and product sizes when making purchasing decisions. Edgar Dworsky, consumer advocate and founder of Consumer World has an ongoing list of products who have changed product size or/and quality.

Bulk Buying

Consider buying in bulk or opting for larger-sized packages to offset the effects of shrinkflation. Wholesalers like Costco offer annual fees starting at $60, but you can score some of the lowest prices available on popular items when you purchase them in large quantities.

Alternative Brands

If you've been loyal to a brand but the prices aren't working for you anymore, widen your scope. Supermarket or drugstore brands can be more economical and may not always be subject to shrinkflation.

Service Evaluation

Conduct thorough research and read reviews to assess service quality before making purchases. If you notice a decline in quality, write a review or engage in consumer advocacy initiatives that advocate for fair market practices and transparency in business operations. While it may not result in a reversal to the original portion quality, if enough consumers voice their opinions, the company may think twice about further size reductions on other products.

Ultimately, effective budgeting and financial planning are essential tools in protecting your wallet against inflationary pressures. Contact us today to discuss strategies to safeguard your financial future!


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About the author

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

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The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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