New Legislation to Combat Shrinkflation?

Lawmakers propose bill empowering federal, state regulators to take action against manufacturers
Lynn Petrak, Progressive Grocer
Sen. Robert Casey (D.-Pa.), who proposed the Shrinkflation Prevention Act, published a report in late 2023 on the topic.

Last month, President Joe Biden decried shrinkflation in a message timed around the Super Bowl. Now, legislation has been put forth in Congress calling for shrinkflation to be regulated.

U.S. Senator Robert Casey (D-Pa.) introduced a bill, S-3819, calling for the U.S. Federal Trade Commission (FTC) to issue regulations to establish shrinkflation as an “unfair or deceptive act or practice.” The bill is co-sponsored by U.S. Senators Tammy Baldwin (D-Wis.), Cory Booker (D-N.J.), Sherrod Brown (D-Ohio), Jacky Rosen (D-Nev.), Elizabeth Warren (D-Mass.)  and Sheldon Whitehouse (D-R.I.).   

Otherwise known as the Shrinkflation Prevention Act, the legislation proposed on Feb. 28 authorizes the FTC and state attorneys general to pursue civil actions against companies viewed as engaging in the practice of downsizing products but selling them at the same or similar price. 

Like Biden, the Democratic lawmakers called out manufacturers. “Americans are forced to pay for corporate stock buybacks and executive bonuses every time they go to the grocery store. And corporations are always finding new ways to charge people more to increase their profits, like shrinking their product without shrinking their prices,” said Brown. “Our bill will crack down on this greedy practice and make sure families get every ounce they pay for.”

Casey called the practice “greedflation” and cited U.S. Bureau of Labor Statistics (BLS) data showing that about 10% of inflation for some product categories can be attributed to shrinkflation. “Corporations are trying to pull the wool over our eyes by shrinking their products without reducing their prices — anyone on a tight budget sees it every time they go to the grocery store,” he declared. “Pennsylvania families are sick and tired of digging deeper into their wallets for their weekly grocery runs while corporate CEOs laugh all the way to the bank. I’m fighting to crack down on shrinkflation and hold corporations accountable for these deceptive practices.”

The Consumer Brands Association (CBA) responded to the move. “The proposed bill is election year posturing, when in reality the FTC already has the authority to regulate company practices to protect consumers. CPG products all exist in highly competitive markets where consumers have many choices at many price points," said David Chavern, president and CEO of the CBA. "There is a lot of market discipline on price, and companies are transparent about both price and product size to ensure consumers can make informed decisions. The companies that make grocery staples have long-term – often multi-generational – relationships with the people who use their products. The goal is always to deliver the highest value possible to maintain that strong relationship.” 

Moving forward, the bill faces likely debate in the Senate with questionable bipartisan support. This week, Sen. John Thune (R-S.D.) commented on the proposal: “These arguments are political spin, not serious explanations.”

On the Senate floor, Thune called out the Biden Administration for high inflation rates under its watch. “The cost of food now takes up a larger share of Americans’ disposable income than it has at any point in more than 30 years. Faced with higher prices, shoppers have had to adjust. Families are opting for cheaper alternatives. They’re putting items back on the shelves, and they’re hunting for deals at multiple stores,” he remarked.

Also this week, a media briefing presented by FMI – The Food Industry Association addressed the issue of both inflation and perceived shrinkflation. In that briefing, Numerator’s chief economist Leo Feller noted that Consumer Price Index (CPI) data from the BLS already adjusts for shrinkflation and explained that some manufacturers have chosen to change package and portion sizes rather than pass along higher finished good prices to consumers. “For families on fixed budgets, raising prices might be more difficult for them,” said Feller, who is also a senior economist and professor at UCLA.

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