The oldest trick in the retailer book is back.
We have previously written about shrinkflation – the “creative” masking of higher prices whereby retailers sell a materially lower amount of products for the ‘same’ price, covering up what is often a significant price increase on a “per unit” basis (see “Shrinkflation” – How Food Companies Implement Massive Price Hikes Without You Ever Noticing“, “Shrinkflation Hits The UK: Toblerone Shrinks By 10%, Price Stays The Same“, Shrinkflation Intensifies – Stealth Inflation As Thousands of Food Products Shrink In Size, Not Price), and we have a feeling that in light of the recent surge in commodity costs and food prices, we will be writing about it a whole lot more in the coming weeks.
Take Costco, which as The Bear Traps report notes, is now charging the same price for paper towels but the roll has 20 fewer sheets. TBT refers to a recent post in a Red Flag Deals message board, where a member makes the following observation:
Costco paper towels. Same price as the previous several times buying them. Now with 20 fewer sheets.
The stealthy decline of 20 sheets per roll of towels from 160 to 140 for the “same price” is the functional equivalent of 14.3% inflation, and as TBT notes, “In our experience, only potato chip companies can get away with selling a half empty package.”
Of course, once companies realize they can get away with such shrinkflation – and they will because as a RFD member responds…
I tried telling the clerk at Costco about this, and they said “who cares, it’s just 20 sheets.”
Will be the typical response.
… the obvious next step will be to no longer bother with such attempts at masking double digit inflation, and to hike prices outright until there is an actual decline in supply, or as TBT predicts, “this is the precursor to real inflation next.” And sure enough, names from consumer giants from Kimberly-Clark to Clorox, Procter & Gamble, as well as food makers such as Hormel, JM Smucker, General Mills, Skippy and Hershey are already doing just that.
But don’t worry, according to the Chairman, “it’s transitory.”
Source: Zero Hedge