Biden calls ‘shrinkage inflation’ in attempt to reframe the way voters view the economy

(Andrew Harnik/Associated Press)

Biden calls ‘shrinkage inflation’ in attempt to reframe the way voters view the economy

Election 2024


March 8, 2024

President Biden is doing everything he can to invoke shrinkflation.

The term refers to a seemingly hidden way in which companies can increase their prices

ever so

slightly reduce the size of their products

without lowering the price

. Suddenly there are fewer pretzels in the bag, less toothpaste in the tube and shorter bars.

It’s called shrinkflation, Biden said in his State of the Union address on Thursday evening. You get charged the same amount and you have about, I don’t know, 10% less Snickers in it.

The president’s focus on contraction-flation is part of a broader strategy to reshape the way voters think about the economy ahead of the November election. Biden is trying to deflect criticism of high prices and blame big business.

He also tries to show ordinary people that he is fighting for them as he struggles to convince the public that the economy has become stronger under his leadership.

He previously addressed the issue of shrinkflation in a video released on Super Bowl Sunday and highlighted a social media post from the Sesame Street character Cookie Monster complaining about smaller cookies.

The low unemployment rate of 3.7% and record 16 million applications to start new businesses have been largely overlooked by voters, who are left hanging on higher food and housing prices after inflation rose by 9.0% in June 2022. 1% had reached a four-decade high. Even as inflation has fallen to 3.1% per year, consumers are still concerned about paying a premium in supermarkets.

Joe Biden recognizes that high food prices are a threat




politically, says Ryan Bourne, an economist at the Cato Institute, a libertarian think tank. “When consumers go into the grocery store, they remember paying more than they did in 2019.”

But Bourne warned that, as an alternative, companies could have simply raised their list prices without shrinking inflation, potentially further upsetting consumers and damaging the president’s approval on the issue. Only 34% of American adults say they approve of how Biden has handled the economy, according to polling from the Associated Press-NORC Center for Public Affairs Research.

Some companies did so because they thought their customers would prefer to do so rather than pay higher prices, Bourne said. So I think the president has to be very careful what he wishes for when he says he thinks contraction inflation is unfair.

Sen. Katie Britt (R-Ala.), who delivered the Republican response to the State of the Union address, blamed inflation on Biden and what she called his reckless spending.”

Republicans have claimed that prices rose because of Biden’s $1.9 trillion pandemic relief package, even though the price increases were also global in nature and not limited to the US. That’s a sign that supply chains have broken and energy and food prices have risen after Russia’s invasion of Ukraine played a role.

In a report published Wednesday, liberal economic advocacy group Groundwork Collaborative dug into inflation rates published by the Bureau of Labor Statistics and documented evidence of contraction inflation. This showed that this has played a meaningful but modest role in the higher prices since 2019.

More than 7% of the increase in coffee prices was due to reduced packaging. About 10% of the higher prices for snacks and household paper products were due to contraction inflation. And for a president who loves ice cream, about 7% of the inflation for that product came from contraction inflation.

Companies may have masked the higher prices from customers but were honest with investors when it came to profit figures, the report said. Some companies, such as General Mills, have also proposed smaller package sizes as a way to manage their own costs and address the challenge of climate change.

Snack company Utz has shaved its chip bags by half an ounce to 9 ounces, the report said. It pulled two ounces worth of pretzels from its pretzel jars, with the CEO announcing to stock analysts that he was able to manage what the industry calls price package architecture. PepsiCo has reduced the size of its Frito Scoops bags, Gatorade bottles and Doritos bags.

The reason we’re seeing this now is because contraction inflation is a late-stage greed inflation, when you’ve gone as far as you can go in raising prices and consumers can’t stomach another increase, says Linsday Owens, executive director of the Groundwork Collaborative. It’s much more deceptive than an increase in list price.

Sen. Bob Casey (D-Pa.) has introduced a bill that would ban shrinkage by directing the Federal Trade Commission to treat it as an unfair or deceptive practice, allowing the government to impose civil penalties on companies that do so.

Biden fully endorsed the measure in his speech.

Pass Bobby Casey’s bill and stop this, he said.

Josh Boak writes for the Associated Press.


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