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Manufacturers use 'shrinkflation' to pass costs on to consumers - YouTube
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Judy: With inflation at a
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40-year high in the U.S., we're
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all spending more when we go to
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the store.
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But economics correspondent Paul
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Solman reports that there is
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another dimension of inflation
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these days -- shrinkflation.
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We'll let him explain.
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Paul: So what is this?
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The rogue's gallery or
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shrink for Asian?
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-- Shnkflation?
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Edgar: These are some of the
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newer items.
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Paul: In fact, items consumer
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advocate and lawyer Edgar
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dworsky had bought in just the
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past week.
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Edgar: The first one here is
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kind of an egregious example.
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Angel soft toilet paper used to
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have 425 sheets on a roll.
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The new one has 320.
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It's almost two full rolls in
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new sizing.
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Look at the packages.
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Don't they look almost
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identical?
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Paul: Do they ever.
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And that's the key to what's
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being called shrinkflation, says
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dworsky, who writes the online
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consumer world newsletter and
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has been tracking product
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downsizing for decades.
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Edgar: I remember the Charmin of
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the 1960's when Mr. Whipple came
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on TV --
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>> Please don't squeeze the
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Charmin.
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Edgar: It had 650 sheets on a
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roll.
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The biggest one today has 366.
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It's about 90% less.
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Paul: It's not just toilet
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paper.
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Ice cream tubs used to be a half
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gallon, or two quarts, then 1
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and three-quarters quarts,
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they've now trimmed down to a
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svelte 1 and a half.
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Because lately, it's been the
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incredible shrinking everything.
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Edgar: Shrinkflation tends to
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come in waves.
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We happen to be in the middle of
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a tidal wave at the moment
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because of inflation.
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Paul: That's because material
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and transportation costs have
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been soaring since the much
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reported supply chain snags.
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How best to pass them on to us
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consumers?
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Edgar: Manufacturers rely on
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both raising the price and
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shrinking the product.
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The difference is they know that
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consumers are price conscious
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and consumers will catch the
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fact if that container of Orange
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juice went from $2.99 to $3.39
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and they'll balk, they'll
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complain, maybe they'll switch
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to another brand.
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But they know consumers are not
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net weight conscious.
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They're not going to notice most
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of them if the product has
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gotten a little bit smaller.
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Paul: Especially not if the
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shrinkage is pretty much
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indiscernible.
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What is that, dishwashing
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detergent?
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Edgar: This is dawn.
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The current seven ounce little
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bottle is now six and a half
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ounce.
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So you lost half an ounce.
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Honest to goodness, I don't know
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how they did it.
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The bottom line is you are
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getting half an ounce less.
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This is post honey bunches of
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oats.
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The old one was 14 and a half
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ounces.
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The new one is 12 ounces.
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Look at the boxes.
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They look identical straight on.
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You got 17% less.
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That translates into two fewer
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bowls in the new box.
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And the price was the same.
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Paul: Now, the official
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inflation rate is 9.1%.
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The honey bunches rate, 17%.
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No wonder corporations are
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posting record profits.
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They can raise prices above the
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overall inflation rate, and we
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won't even notice.
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Edgar: Gatorade.
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Forever it's come in 32 ounce
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bottles.
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The new one is 28.
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So you lost four ounces in every
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one.
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But you look at them, you say,
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they look the same height.
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What did they do?
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Paul: They squeezed the midriff.
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Edgar: They gave it a waistline.
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That's exactly right.
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And the company says, oh, now
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it's easier to hold.
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Well, thank you very much.
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I'd rather have the extra four
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ounces and I'll suffer holding
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the old one.
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Paul: And companies also
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rejigger the products
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themselves.
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Edgar: Folgers ground coffee
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recently reformulated.
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They said they fluffed up the
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beans so they could no longer
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put 51 ounces of ground coffee
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into their canisters.
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They could only fit in 43 and a
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half ounces.
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But they're still claiming it
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makes up to 400 cups with half a
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pound less of coffee.
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You'll have to decide as a
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coffee drinker, is it still the
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same cup that you used to get?
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Paul: So the onus is on the
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consumer to be hypervigilant,
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says dworsky.
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In a supermarket, there's that
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unit price for everything,
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right?
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Edgar: I don't know the
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statistics of usage of unit
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pricing.
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My sense is it's very low.
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Paul: Moreover, since the
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self-proclaimed Mr. Consumer --
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Edgar: Where unit pricing
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doesn't help is when the
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individual product changes.
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So unless you've memorized that
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your Keebler cookies were 14.3
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cents an ounce and now it's 16.7
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cents an ounce, is not going to
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help you.
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Paul: I would I would be totally
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overmatched.
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Edgar: I mean, it's bad enough
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that I try to counsel people,
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look at the items you buy all
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the time, look at the net
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weight, the net count, memorize
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it.
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And when you go back to the
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store, double check that it
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hasn't changed.
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How else are you going to, you
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know, make a choice
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intelligently if you don't know
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what it used to be?
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Paul: Yeah, but that's almost
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impossible.
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Who's going to keep track of
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that?
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You are either a professional or
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a lunatic.
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Edgar: A little bit of both.
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Paul: Meanwhile, for the rest of
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us, inflation at the store these
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days turns out to be even more
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pronounced than we realize
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because of shrinkflation.
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