Of course, there’s “shrinkflation,” which everyone despises when the quantity decreases but the price stays the same, and “shelflation,” where a product’s shelf life is compromised due to supply chain issues. These phenomena, present for decades, contribute to the rising cost of groceries. However, “stretchflation” seems to be a new trend in our grocery stores.
Stretchflation, first reported in Europe, involves increasing the quantity of a product while its price rises disproportionately. It’s a more insidious way to deceive consumers. An unverified example is Saputo’s sliced provolone sold at Costco. The package size increased from 620 grams to 750 grams, a 20% increase. However, the price of the 750 grams is over 15 dollars, more than a 25% increase, according to some reports. It seems that some bakery products have also faced this issue recently. Stretchflation is hard to detect as the approach is quite subtle.
These cases are rare in our grocery aisles for now, but we might see more in the future. The recent consumer revolt against shrinkflation is pushing manufacturers and distributors to offer more, but they also seem to be asking for more in return with stretchflation.
The common denominator of all these strategies is the economic context of raw materials. Sugar is about 50% more expensive than five years ago, and cocoa is 103% more expensive. Orange juice prices are at a record high. There is always some ingredient that experiences a price surge for one reason or another. Either some ingredients increase wildly, or prices fluctuate enormously, as seen with wheat and other commodities at the beginning of Russia’s invasion of Ukraine in 2022. Manufacturers need to adjust to maintain their market share. But stretchflation is different.
The primary motivation is likely to defend the industry’s image, not just to cut costs and offer less. For about twenty years, starting from the inflationary phase of the early 1980s, bulk buying was the trend. “Big was king,” as the saying goes. Since then, there have been two major cycles of shrinkflation: in 2008-09 and more recently, from 2022 to now. The recent cycle of shrinkflation probably ended earlier this year, but the industry’s response seems to be stretchflation.
One could always wish to legislate to prevent companies from changing quantities. But we risk seeing prices increase further, and there’s nothing illegal about it.
Nevertheless, these tactics are a nuisance for all of us. The most concerning aspect of these quantity reduction or increase strategies is their effect on our bills and how Statistics Canada measures their impact on food inflation. Although the federal agency reassures us that it monitors the effect of these strategies on food inflation, it rarely provides clear examples of how it adjusts its methodology accordingly.
Another issue is retail sales taxes. Many food products lose their tax-exempt status if the quantity is too reduced. This is the case for ice cream, puddings, or even granola bars, for example. Reading the rules on what is taxable or not at the grocery store is complicated. With quantity changes, many products become taxable simply because the quantity has been reduced, or vice versa.
Besides wanting to legislate, the lack of transparency on our grocery bills regarding taxes is probably the most pressing issue to address.
