Understanding contractionary inflation is one thing. It’s another thing to be warned at the grocery store.
“Shrinkage inflation” is when companies offer customers less of their product at the same (or even higher) price. This strategy has become common among consumer goods suppliers amid a backdrop of high inflation.
Now French supermarket chain Carrefour is showing shoppers an example of this, with a label on the shelf that reads: “The volume or weight of the product has decreased and the supplier’s effective price has increased.”
Dozens of products have been labeled with the label since Monday, Reuters reported.
“The purpose of stigmatizing these products is to make manufacturers reconsider their pricing policies,” Stefen Bompais, Carrefour’s customer communications director, told the news agency. Carrefour is about to enter its annual price negotiations with Nestlé, Unilever, PepsiCo and other well-known brand owners.
In shrink-and-swell examples, it showed shoppers a bottle of Guigoz infant formula made by Nestlé and a bottle of sugar-free peach-flavored Lipton iced tea made by PepsiCo.
Carrefour Chief Executive Alexander Bompard said consumer goods companies were not cooperating with price-cutting efforts despite falling raw material costs. He is an ally of French Finance Minister Bruno Le Maire, who has urged companies to lower prices and pointed to Unilever, Nestlé and PepsiCo for not complying.
Of course, retailers themselves have been blamed by consumer groups for shrinking their own products – including Carrefour. But France and other European countries are trying to help consumers cope with rising living costs, in part by pressuring big companies to lower prices.
