You pay the same, get less: the hidden cost of shrinkflation

This article was originally published in Ceteris Paribus, in Portuguese, on April 22, 2025.

Have you noticed smaller packaging for the same price? The Broad National Consumer Price Index (IPCA) closed 2024 at 4.83%, breaching the ceiling of the target once again. Expectations for the IPCA remained at 5.57% for 2025, above the 4.50% target ceiling. Within this context, shrinkflation emerges — a term that mixes “shrink” and “inflation”. Although silent, this practice reduces your purchasing power daily.

What is shrinkflation?

Shrinkflation is the business practice of discreetly decreasing the weight or volume of products without proportionally reducing the price, which amounts to a hidden inflationary increase. A product that previously weighed 200g might be reduced to 180g while maintaining or even raising its original price. This strategy, common after the pandemic, became an effective way for companies to pass on rising costs to less attentive consumers. When input and logistics costs soar, companies face three options: pass on the price, cut margins, or reduce the size. The third seems the “least painful”, because the label takes advantage of the distracted eye.

A study by Janssen and Kasinger (2025) examined ten years of supermarket receipts in the US and found that, although only 2% of products decreased in size, this happens five times more often than packaging increases. On average, the portion per package shrank by 8%, but the price paid per gram or milliliter rose by 12%. Because most customers do not notice the change, sales do not drop. It is an increase that slips past the distracted eye.

How do other countries deal with this?

International experience shows that price transparency, rather than draconian punishments, is the preferred path.

France — Since July 2024, every product that shrinks must carry, for six months, a yellow warning with the expression shrinkflation and display the previous price per unit of measurement.

European Union — Since Directive 98/6/EC, the bloc has made it mandatory to simultaneously show the total price and the price per kilogram or liter, to facilitate comparison between brands.

Australia — The Unit Pricing Code, under competition law, forces supermarkets to display the value per 100g or 100mL on shelves and e-commerce.

United Kingdom — With rising prices in 2023, the Competition and Markets Authority concluded that clear and legible unit pricing helps more than standardizing package sizes.

In all successful experiences, the common thread is transparency: when the label shows the price per kilo/liter and a visible warning of a weight change, the consumer compares in seconds and punishes the manufacturer at the checkout, migrating to the neighboring brand.

The risks of a law with heavy sanctions

Bill (PL) 1017/2025 foresees a fine of up to 10% of gross revenue and even the revocation of business licenses. At first glance, it sounds protective; in practice, it can generate adverse effects. Businesses that operate with lower margins would have to bear the cost of packaging redesign and new tracking systems — for many, the way out would simply be to increase prices or close their doors.

Furthermore, rigid requirements make the operation more expensive and favor large chains, which dilute costs at scale. The result can be less competition — exactly the environment where shrinkflation thrives.

Shrinkflation is a transparency test for markets and public policies. Smaller packages for the same price dilute purchasing power and blur statistics. Banning it by force, however, risks turning a problem of centimeters into an increase in Reais. Brazil should follow the logic that worked abroad: illuminate the shelf, not wield the club of billionaire fines.