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economy

Ever noticed a bag of chips that used to weigh 500g now sitting at 450g on the shelf, price unchanged? That practice is called 'shrinkflation.'

Why do companies typically choose this approach over simply raising prices?

Because governments in many countries legally restrict direct price increases on consumer goods
Because reducing package size also cuts distribution and packaging costs, effectively doubling the gain
Because consumers are far less sensitive to changes in quantity than to changes in the price tag ✓

Because consumers are far less sensitive to changes in quantity than to changes in the price tag
This is the behavioral economics concept of 'price salience' — the price is immediately visible at checkout, but most shoppers never flip the package over to check the net weight printed on the back.

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economy

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