This chart using data from the U.S. Senate, shows grocery prices due to shrinkflation. (Chart courtesy of U.S. Senate)

Editor’s Note: This is the fifth installment in a series that examines food insecurity and its causes.

In September 2024, the Economic Research Service of the U.S. Department of Agriculture (USDA ERC) published a report titled, Global food security improves in 2024 with higher incomes and lower inflation.

“Inflation, severe weather events such as El Niño, and supply chain disruptions related to conflicts in the Black Sea and Red Sea regions contributed to higher prices during 2021−23. USDA estimated that international agricultural commodity prices would decline in 2024, providing relief to global food insecurity,” the report states. “Prices of crop inputs, including fuel, oil, and fertilizer were projected to decrease from their pandemic highs.”

A closer examination finds that with lower inflation, food prices are not  decreasing; they are simply rising at lower percentage rates. The ERS report predicted that:

“In 2024, prices for all food are predicted to increase 2.3%, with a prediction interval of 2.1 to 2.4%. Food-at-home prices are predicted to increase 1.2 percent with a prediction interval of 1.0 to 1.5%.”

The report goes on to say that the food-at-home (grocery store or supermarket food purchases) consumer price index increased 0.1% from September 2024 to October 2024 and was 1.1% higher than October 2023.

A June 12 Purdue University report found that, surveyed consumers saw food prices rising more than other goods and services.

But, while the ERC reports the cost of food is decreasing, prices have risen steadily over the past four years. On Sept 9, National Public Radio reported that from February 2020 to July 2024, grocery prices grew a cumulative 25.6%. That’s higher than overall inflation, which was 21.6% during that same period.

While food insecurity and inflation were hot political issues during the 2024 presidential campaign, many media outlets have sought to politicize the issue. But there is far more to the problem than politics.

On Oct. 29, The Atlantic asked the question: Does “greedflation” explain high prices?.

The article states that in August 2022, grocery prices had increased 14% since 2023.

“Although inflation has cooled significantly since then,” The Atlantic states, “that doesn’t mean prices have actually gone down; it just means prices have stopped rising as dramatically.”

Why? One explanation, that has become more popular is “greedflation,” the idea that corporate greed, via excessive markups, is responsible for the pandemic-era price increases, The Atlantic suggests.

Elon University published an article on Sept. 19 stating the usual reasons for inflation, stating several factors have driven these increases. The COVID-19 pandemic caused major disruptions in supply chains, affecting production and distribution. The war in Ukraine further strained global food supplies, especially wheat and sunflower oil. Energy price spikes also added to the cost of transporting goods, leading to higher prices at the grocery store. The article then goes a bit further.

“Evidence suggests that some corporations have been taking advantage of the situation, it states. “For instance, major food companies like Tyson Foods and Kraft-Heinz reported record profits in 2022. While input costs like fuel and raw materials have started to stabilize, grocery prices haven’t followed suit. This raises concerns that companies are using the crisis to increase their profit margins.”

Another factor  is the lack of competition in the grocery sector, says Elon University. Large corporations such as Walmart, Kroger, and Albertsons dominate the market, giving them significant control over pricing. This leaves consumers with fewer alternatives and little recourse when prices go up.

A May 22 NewsNation report cited a federal study claiming the economists found that price markups have remained relatively flat overall. While corporate profits are up, pricing does not tell the whole story. The article goes on to include the same claims as Elon University, the ERC, and other sources: The COVID-19 pandemic, disruptions in supply chains, and etc.

Others, including federal lawmakers have begun looking to major food manufacturers such as PepsiCo, General Mills, and Coca-Cola, for what they are calling “shrinkflation.”

As Jon Houke, writing for RetailWire, stated in his Oct. 7 article, Lawmakers call on three major food companies to stop “skrinkflation:

“‘Shrinkflation,’ when a company reduces product size but keeps the price the same or higher, has been chewing into our favorite products for years. Companies that sell consumer goods such as paper products, snacks, and candy commonly use the pricing strategy to retain profit margins.”

According to an Oct. 7, report by NBC, a letter sent to the three corporations by Sen. Elizabeth Warren of Massachusetts and Rep. Madeline Dean of Pennsylvania, said that General Mills, for example, reduced the sizes of many cereal boxes in 2021, “including decreasing ‘Family Size’ Cocoa Puffs from 19.3 ounces to 18.1 ounces while charging the same price,’ the letter to General Mills Chairman and CEO Jeff Harmening read, adding: “Then, from mid-2021 to mid-2022, General Mills hiked prices five times, and in 2023, your Group President of North American Retail bragged that the company was ‘getting smart about how we look at pricing.”

NBC went on to report that Coca-Cola has downsized its products, too, said the letter to Chairman and CEO James Quincey, and it is “selling less soda for the same price.” The same with PepsiCo, which “replaced its 32 oz Gatorade bottle with a 28 oz bottle for the same price.”

Lawmakers are not alone in noticing the increase in “shrinkflation.” On Sept. 30, 2024, LendingTree published its analysis of nearly 100 products. The key findings, LendingTree reported are:

A third of the 98 products LendingTree researchers analyzed have shrunk. Household paper products — toilet paper and paper towels — saw the highest rate of change via fewer sheets per roll. 12 of 20 (or 60.0%) household products reduced their sheet count, with 12 mega rolls of Angel Soft toilet paper decreasing the most (25.4%) in size from 429 to 320 sheets a roll.

• Seven of the 16 (or 43.8%) breakfast items analyzed have been downsized since 2019 or 2020. Family-size Frosted Flakes dropped 9.6% from 24.0 ounces to 21.7, leading to a 40.0% price increase per ounce. Of the 13 candy items, five (38.5%) changed size. Meanwhile, six of 22 (27.3%) snacks analyzed underwent size reductions.

• 71% of Americans report experiencing or noticing at least one incident of shrinkflation in the past year. 57% of Americans say they’ve experienced or noticed multiple incidents of shrinkflation in the past year. Baby boomers (70%) are much more likely to report noticing multiple instances of shrinkflation in the past year than Gen Zers (48%) and millennials (54%). 87% of Americans who’ve noticed shrinkflation agree it’s becoming more common.

• Americans feeling misled by shrinkflation boycott offenders. 82% who’ve noticed shrinkflation say they feel deceived when they see incidents of it, and 66% say they’ve stopped buying products because of it. Gen Zers (80%) are most likely to say they stopped purchasing products because of shrinkflation.

• Consumers don’t just look at prices, and they prefer price bumps over shrinking products. 89% of Americans always or sometimes compare brands’ product sizes or quantities when shopping. Many Americans would prefer that companies raise prices (38%) rather than reduce sizes (28%).