HIGH expenses have been weighing on Americans’ wallets for a while — but there’s another sneaky surprise you may encounter at the grocery store.
This is called shrinkage inflation, which companies use to not only reduce the size, but not even reduce the price of their products.
For many, inflation was the most notable factor, with the latest data showing the rate has been fixed at 9.1%.
But both have had a negative impact on Americans, forcing them to try to cut back on spending as much as possible.
Mark Hamrick, senior economic analyst at Bankrate, said consumers are buying less or abstaining from shopping.
“We’ve heard from retailers where, for example, consumers are buying half a gallon of milk instead of a whole gallon just to avoid the cost of the gallon,” Hamrick said.
While there’s hope this will help consumers avoid “spending max” during a shopping spree, it could encourage frequent visits to stores.
Mr Hamrick gave an example of consumers wanting to buy a pound of coffee, but one company shrunk it down to 12 ounces.
“Either they have to cut back on their coffee consumption, or they have to go back to the store to buy a new pack if they run out sooner.”
He added that this is a “less than optimal solution”.
Which products are most affected by shrinkage inflation?
This year, the grocery store has seen various products scaled down by companies that may have misled consumers.
According to Mr Hamrick, packaged goods are most at risk of shrinkage.
He also named soft drinks including Coca-Cola and snack foods.
Professor Hitendra Chaturvedi of Arizona State University’s WP Carey School of Business provided 12 News Phoenix with a full list of specific articles.
They are listed below along with the percentage of size reduction from the original.
- Crest Toothpaste: 7%
- Cottonelle: 8%
- Charm: 8%
- Chobani: 15%
- Pigeon body wash: 8%
- Follower: 15%
- M&M Keebler Biscuits: 14%
- Detergent profit: 7%
- GM cereals: 5%
- Protective soap: 20%
- Strawberry Quaker Oats: 20%
- Sun Maiden Raisins: 11%
- Tostito’s Touch of Lime Chips: 15%
And then there are also Gatorade bottles that have been downsized from 32 ounces to 28 ounces.
Do we have to worry about this in restaurants?
In addition to grocery stores, some restaurants do the same.
In particular, fast-food restaurants like Burger King and Subway have reportedly shrunk their items.
In particular, Subway’s chicken wraps and sandwiches contain less meat, according to Bloomberg.
Some restaurants have also switched to cheaper cuts of beef to avoid rising costs.
Additionally, steakhouse chain J. Alexander’s uses ingredients from filet mignon (that used to be discarded) to make cheeseburgers, according to Bloomberg.
How to avoid becoming a victim of shrinkage
Now more than ever you need to be aware of what you are buying, whether you are at a restaurant or shopping for groceries.
At a restaurant, Herr recommends doing two things to mitigate the financial impact and get your money’s worth.
One thing you can do is have a chat with the waiter or waitress and find out what the portion sizes are.
And interestingly, Mr Hamrick noted that restaurants have a reputation for overcharging customers.
If you find this to be the case, you can suggest sharing a meal with a family member.
“For example, with something like a salad, which is very often high in calories due to high-fat dressings, a good strategy is to split something up or buy entrees with smaller portion sizes or smaller portions,” Hamrick said.
Or of course there is always the option to eat half of your meal at the restaurants and take the rest home as leftovers.
Essentially, that becomes two meals instead of one.
At the grocery store, Mr. Hamrick said you need to know the unit price of the product.
And then you have to decide whether you better buy a “smaller or a bigger size”.
“I think all too often people end up buying a lot more than they need and end up spending more than they should,” Hamrick said.
A money-saving mom recently shared five tips on how to shave hundreds of dollars off your grocery bill every month, including taking weekly inventory and meal planning.
How to manage finances now
With high inflation and the threat of a recession, many Americans may not know how to manage their money right now.
But regardless of what happens, Mr Hamrick says it all starts with a budget.
This includes “knowing where the money is coming in, how much money is coming in [and] where the money runs out,” he said.
“There is a risk that people have experienced some changes in their spending that they may or may not be so aware that it’s probably worth investing some time to understand what we’re spending money on these days.”
And with interest rates set to continue rising, Mr Hamrick said it’s best to pay off all credit card debt now.
“The average discount rate for credit cards right now is only about 17%,” he said.
“And obviously you’ll accrue that interest if you don’t pay the balance after a month.”
But despite some concerns, the overall health of the economy remains strong – with 10.7 million job vacancies in June.
And Mr Hamrick recommends taking advantage of this while it lasts, whether you’re looking for employment or “asking for a raise” at your current job.
Also think about emergency and retirement provisions.
Emergency savings come in hand for a financial disaster or an unexpected life change.
“Whether it’s a trip to the emergency room, a home repair, or an auto repair, these unexpected events should be expected throughout our daily lives,” Hamrick said.
“They’re basically unavoidable, and some people may turn to credit cards when they don’t have money in the bank,” he added.
For retirement savings including 401,000, remember that they are technically investments.
This means that making a profit is never guaranteed – the value of your wealth could even go down.
But historically great indices like the S&P 500 are producing cheap returns.
From 1957 to 2021, the benchmark has gained an average of 10.5% per year.
However, the stock market has been down this year as recession and inflation fears continue to worry investors.
That means if you decide to invest now, you’re buying at a lower price.
“They need to maintain a disciplined investment process that is very often tied to a 401K plan, which is also very often supplemented by employer contributions.”
While employer contributions can vary, most are up to 6% of your salary.
For more related stories, see Three Ways to Boost Your Budget as Social Media Pushes Americans into Bad Money Habits.
A money coach reveals how you can cut your grocery bill by $250 a month.
And one budget-conscious mom bought two dinners at Walmart and Aldi for $2 each.
https://www.the-sun.com/money/5932710/shrinkflation-inflation-avoid-how-save/ I’m an economist – exact label details will tell you if it’s better to buy in bulk to save money and beat shrinkage