Packing products with smaller contents, or what is now called ‘shrinkflation’ is a form of deception for inflation.
What the government, in allowing this trade practice, is doing is to validate its claim of lowering of inflation rates in December and even up to now, when the truth is consumers are not getting value for their money.
It is disgusting to see that the Department of Trade and Industry (DTI) – which is supposed to monitor and regulate price hikes in the market – is actually condoning this trade malpractice just so it can brag to all and sundry that because of adept economic management, inflation has been going down in our country whilst inflation in the world has gone berserk.
In justifying this malpractice, the DTI said instead of raising prices, it has permitted manufacturers of basic necessities and prime commodities to reduce the size or weight of their products to cope with rising production costs and remain profitable.
Official permission
Trade Assistant Secretary Amanda Marie Nograles, head of the DTI’s consumer protection group, said in a television interview that the agency allowed some items in its list of monitored consumer products to “shrink” but only after manufacturers met certain conditions that the DTI had imposed.
The DTI must have first checked their packaging which should reflect the new weight following the reduction of contents. So if there has been a decrease in ‘grammage’ and the new weight is reflected in the packaging, that’s a check, she explained.
Manufacturers must also justify that reducing the content or weight and selling these products at the same price was based on higher production costs, Nograles added.
“Since this is effectively a price increase, we must check if the manufacturer’s profit derived from the sale of their reduced product would fall as profiteering, which violates the Price Act,” she stressed.
She claimed the manufacturers of the shrunk products have submitted all required documents to justify this move, hence DTI’s go signal without violating the Price Law based on established computations.
Consumers have complained about the shrinking of some basic commodities, a circumvention of the Price Act. The DTI is empowered by law to issue suggested reasonable retail prices for all basic and prime commodities under its jurisdiction.
The Price Act empowers the DTI to issue “suggested reasonable retail prices” for any or all necessities and prime commodities under the agency’s jurisdiction.
Inflation and impact of international events
She agreed that the last few years – after the three-year Covid-19 pandemic– have been challenging for manufacturers, absorbing higher input costs due to supply chain challenges caused by the pandemic and the ongoing war between Russia and Ukraine. She said the resulting elevated inflation made them seek price increases or to shrink their products to stay profitable amid rising costs.
She said that based on the latest SRP bulletin last Wednesday, January 17, only nine items covering different coffee and salt products had their prices increased or their contents reduced.
But consumers are bracing for more product or price adjustments from hereon.
Nograles said they are still assessing 54 notifications for price increases or product size reductions submitted by manufacturers of consumer goods two weeks ago. These were for products like sardines, processed milk, bread, instant noodles, bottled water, processed canned meat and beef and condiments– all essential to the typical Filipino table.
But producers of toilet soaps, candies and batteries have also filed for price hikes or shrinking the content of their products, which Nograles said might not immediately be approved pending evaluations by the DTI.
Unseen inflation
Consumers do not always see the changes immediately as these are sometimes incremental, Phil Lemport, food analyst for the British Broadcasting Corporation (BBC), said in a report.
He added that consumers adapt to the change as they “do not have a choice.”
He said brand loyalty has plummeted amid shrinkflation, with people often transitioning to cheaper brands for non-essentials.
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