Part 4/9:
But why are companies resorting to shrinkflation? The answer lies largely in inflation and production costs. Over a recent period from July 2020 to July 2024, general inflation rose by 21%, while corporate profits simultaneously surged by a staggering 90%. This disparity illustrates that companies are not merely passing on costs to consumers but are also capitalizing on their willingness to accept smaller portions rather than higher prices. A Harvard study reinforces this point, revealing that consumers tend to be more sensitive to price increases than they are to reductions in product size or quantity.