Cookie monster is mad:
But he’s not the only one. President Biden is mad too.
By now, hopefully we’ve all heard of shrinkflation. But if you haven’t, it’s when the unit price (e.g., the cost per pound) increases not because the price of the good went up, but because the product shrank in size.
Let’s be clear about a few things. First, this is nothing new. Here’s an Economist story from 2019 (pre-pandemic and pre-Bidenflation) talking about shrinkflation. You can find many such anecdotal stories back even further.
Second, the BLS is aware of this. They track it, and price it into the CPI. Take a look at the price data which underlies the CPI: it’s all stated in units. Price per pound, price per dozen, etc.
Moreover, the BLS also recently gave us some data on how frequently this happens. It’s pretty rare. Even among food items, which are a category the includes a fair amount of shrinkflation, only about 3 percent of products experienced any downsizing or upsizing from 2015-2021. That’s right, sometimes packages get larger, not smaller, which effectively lowers the unit price. “Shrinkdeflation” anyone?
The following chart is especially interesting. First, it shows the rarity of either downsizing or upsizing products. The CPI measures about 100,000 prices. There are only about 10-70 products per month where downsizing (“shrinkflation”) is happening. Perhaps more importantly, this number has been falling over time, at least for the years they studied. In 2021, the year that “Bidenflation” kicked off, downsizing was almost as common (or rather, rare) as upsizing.
While the BLS report doesn’t give us specific data on cookies in that report, they do tell us about some products that might be close substitutes for cookies: cakes and cupcakes, and snacks. Snacks are the food category with the most shrinkflation over this time period, but it still amounts to only about 0.4 percent of all price reports. Cakes and cupcakes are only about half of that, and almost as likely to be upsized as downsized.
In short: shrinkflation is real, but it’s rare and the BLS incorporates it into the CPI.
One last thing about cookies: a worker earning the average hourly wage can buy a lot more cookies today than in the recent past. Even with the big drop in our cookie-standard-of-living in 2022, you can still buy about 33% more cookies with an hour of work than you could in the 1980s and 1990s:
Economist Writing Every Day 