Shrinkflation in Pakistan

Shrinkflation is everywhere around us, but we don’t usually realise or see it. A home-made nihari dealer in Islamabad’s Naval Anchorage area, recently said that they give 100 gramme beef in one kilogramme nihari. However, the famous nihari shops all around treat their customers with only 75 gramme beef in one kilogramme nihari.

Similarly, one can see the difference when buying bread from the International Islamic University (IIU) hostel or from a normal supermarket in Islamabad. The bread of the IIU hostel is thicker and heavier than that of the supermarket. Upon asking the university cafe manager about the reason, he said that the difference is in the net weight. Their bread weighs 250 grams while the ones sold in the market ranges between 100 to 200 grammes.

Furthermore, almost every time when buying a shampoo, it is obvious that the bottle is not filled properly to the brim. Soaps of famous brands have deep curves indicating that their quantity is less than it used to be in the past. Same is the case with everything that is of use for the general public, including the bricks that one purchases from different vendors as they might vary in size.

This business practice of shrinking the size, quality or quantity of the item while maintaining its price or, sometimes increasing it, is called shrinkflation. The term was coined in 2009 by British economist Pippa Malmgren. Brian Domitrovic too uses shrinkflation in his 2009 book Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity to contrast with stagflation. He writes, “Following World War II, the United States traded depression for an acute period of stagflation. Actually, it was ‘shrinkflation,’ in that the economy was contracting as prices surged.”

We haven’t come across recent evidence of this use – it’s Malmgren’s use that has taken off in the past couple of years. Companies keep reducing sizes of their products instead of increasing prices for standard sizes.

A latest study shows that the first thing consumers consider while making a decision to buy a product is its price and quality. Through different experiments, it has been established that in case of packaged goods, most consumers are not bothered to measure the size or count the number of items as long as it does not make a substantial difference. The Office of the National Statistics in the United Kingdom has reported over 2,500 cases of shrinkflation from 2012 to 2017.

A glance at markets in developed countries shows that consumers are ultra-aware about shrinkflation and even file cases seeking heavy damages from global companies on this account. Recently, a consumer in the US sued McDonald’s stating that the burger they sell is not as big and juicy as advertised. He is seeking $50 million in damages. Had the companies communicated clearly to the consumers that they are going to decrease the quantity of their products, things would have been different. Hiding facts from consumers falls in the category of deception which is unacceptable. Though the practice is common internationally, there is little awareness about it in Pakistan.

In Pakistan, this concept is ignored at best and pushed under the rug at worst. An examination of the website of the Directorate of Consumer Protection Council, a government body, shows that there is no mention of the term ‘shrinkflation’ whatsoever. Similarly, upon asking the Deputy Commissioner of a major city about the actions government take against shrinkflation, his response was: “What is shrinkflation?”

Fixing prices of edibles and other items is a daily practice of the city administrations. It is then the young assistant commissioners who go to markets to enforce that these prices are maintained. However, the shopkeepers find it hard to do so, because they find these prices to be unrealistic. For instance, in the case of meat, how can the shopkeepers sell it at a price which is less than the price of a healthy goat? Similarly, if wheat rate is fluctuating frequently, how can the traders sell it at a fixed price? The traders resort to shrinkflation which protects their profits and satisfies the price-conscious consumer. The market managers time and again analyse the quantity and quality of the products randomly and find out people involved in shrinkflation.

Part of the solution to this problem is to deregulate the market. Naturally, it will reset its balance and the economy will fix its ills. Otherwise, many things will go out of reach of poor people who form over 50 percent of our society.

At present, the government is persistent on not allowing the prices of medicines to increase. It does sound good, but it is not a realistic approach as the previous government had to increase the prices arguing that medicines would vanish from market if their prices were not increased.

The prices of raw materials has been currently increased in global market and Pakistani industry is dependent on imports. In India, the government has relaxed patenting laws and are now known as the pharmacy of the developing world. Pakistan, however, still follows strict branding laws which are agitated against by human rights activists the world over as they believe that lifesaving drugs should be made available to all. But since nothing has been done to stop inflation, our market will sink deeper into shrinkflation.

It is obvious that if shrinkflation and inflation are the only options available on the table, consumers might go for shrinkflation. Unfortunately, this is the situation in Pakistan now. To gather some relevant information, I contacted Nestle asking them about their method of packaging in the context of shrinkflation. They told me that they will reply within office hours. However, many office hours have passed since then and I still haven’t received a response. Nestle is one of the biggest producers of plastic bottles and packaged products, but they do not want to educate the masses about shrinkflation. The media refuses to speak on this practice either. Journalists are merely reduced to being generalists who are happy with churning out political rhetoric; their audience is also happy consuming whatever they sell.

The practice generates a chasm in which industrialists are eagerly engaging in shrinkflation to multiply their profits. Thus, there is a need to educate the masses about the methods of measurement of packaged and loose products so they are not deceived by market players. The government needs to set up a body with a mandate to rigorously curb this practice. If someone is reducing the size of his products, he must inform his consumers about it in a comprehensive manner. When the consumers are educated, they will be able to make informed choices to get what they pay for. It is hence logical that small industries have a chance to flourish as they might try to make a difference by avoiding shrinkflation.

The writer teaches mediatization at International Islamic University Islamabad