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Shrinkflation: PSA to check 'shrinking' sizes of products amid inflation

Ramon Royandoyan - Philstar.com
Shrinkflation: PSA to check 'shrinking' sizes of products amid inflation
Diners observe health protocols at a mall in Quezon City in this June 15, 2020 photo.
The STAR / Michael Varcas

MANILA, Philippines — State statisticians will start checking if businesses are quietly shrinking the size of their products without bringing down prices, as more and more consumers begin to notice they’re getting less for their money amid boiling inflation.

“Shrinkflation” is widely understood as the reduction of the size of consumer products and selling them for the same price. This is a concept popularized by British economist Pippa Malmgren and scholar Brian Domitrovic. 

At a press conference on Friday, National Statistician Claire Dennis Mapa said instructions had been handed down to field researchers of the Philippine Statistics Authority to check if establishments like restaurants and cafeterias are sneakily cutting back on serving sizes amid rising costs of raw materials.

Mapa, however, did not explain how the PSA would measure shrinkflation. 

“Right now, there are no reports of substantial concern,” Mapa said. “We will provide an update if we observe that the concept of shrinkflation is happening.”

Sought for comment, Leonardo Lanzona, an economist at Ateneo De Manila University, explained that shrinkflation is a normal reaction of businesses and firms. 

“Shrinkflation is not new. It is a perfectly rational response of firms to maintain their price and still keep their profit margins,” he said. “The question is how much is the consumers’ response to price changes. The greater the adversity to prices, the greater will be the shrinkflation."

Inflation soared to a near three-year high of 6.4% in July. As it is, the domestic economy is shouldering the burden of expensive fuel prices, supply chain disruptions, and a weakening peso. 

Food inflation, which grew 6.9% year-on-year in July, was the main source of overall price upticks in the past month. 

Mapa confirmed that restaurant and cafeterias prices have increased. PSA data revealed that inflation in restaurants and accommodation services landed at its highest this year at 3.4%. The PSA included hotels, motels, and inns with this dataset.

This could likely be worsened by a weakening purchasing power. The PSA reported that P1 back in 2018 is now just valued at P0.86 in July this year.. This was lower than the June level of P0.87.

INFLATION

PHILIPPINE ECONOMY

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