CPGs are masking inflation by deceiving consumers, lawmaker says

U.S. Sen. Bob Casey has written the heads of four trade associations representing food manufacturers and other CPG companies to express concern about what he described as a trend among producers to mask inflation by quietly downsizing product sizes without adjusting prices or clearly notifying consumers.

In letters Casey sent Wednesday to the chief executives of the Consumer Brands Association, the American Beverage Association, SNAC International and the Personal Care Products Council, the Pennsylvania Democrat cited federal data showing that smaller package sizes have played a significant role in driving up unit costs for a range of popular goods.

For example, Casey said that according to information his office received from the U.S. Bureau of Labor Statistics, snacks are 26.4% more expensive now than they were in January 2019, with nearly 10% of the increase tied entirely to producers cutting package sizes or otherwise reducing the amount of product they provide to shoppers — a practice known as shrinkflation.

Prices for cleaning products have risen about 24% during the period, with more than 7% of the increase driven by shrinkflation, according to the BLS, Casey added.

“Experts have found that corporations use a variety of methods to carry out shrinkflation, many of which are hard for everyday consumers to identify. For example, corporations may reduce the size of containers by a few ounces, add air to a package, or even increase the divot at the bottom of a jar, all while maintaining the same prices — or even raising them,” Casey said in the letters.

Casey said he is concerned about consumers “being pinched by big corporations raising prices despite reporting a string of record profits” and asked the trade groups to provide answers to questions about the role their members play in impacting what consumers pay for goods by late January.

Casey detailed the BLS’ findings about shrinkflation in a report his office released Thursday outlining his contention that companies have not only increased profits by boosting prices but also “found creative ways to make even more money by simply giving customers less.”

“These kinds of changes are often intended to obscure the very real fact that American families are getting less for their money. It is obvious that the cost of toilet paper rose; it is harder to detect that rolls shrank in size. But both have the same effect: American families are getting less and corporations are making more,” the report said.

The report issued last week follows one Casey’s office issued in November that questioned why food prices have increased more quickly than costs for other goods.

Grocery inflation fell in November to a 1.7% annual clip, according to the BLS, continuing a steady descent that began after the rate reached a multi-decade high of 13.5% in August 2022.