In this video, we explain to you what is Shrinkflation, how it works, its characteristics, advantages, and disadvantages.
What is Shrinkflation?
It is a scenario where the size of the product shrinks, and the price remains constant. Shrinkflation occurs primarily because the cost of the product has increased in general, and the customer has to pay more to get the product. Shrinkflation is also considered a kind of hidden inflation.
Characteristics of Shrinkflation?
– Tough to calculate Shrinkflation.
– The price level becomes misleading if the goods become smaller.
– It reduces the consumer’s trust in the brand.
Advantages of Shrinkflation
– It helps the producer bear with the competition
– It helps to retain the customers.
– It protects the customers from inflation.
– It maintains the profit levels of the manufacturers
– It helps to maintain productivity even if the input costs are increased.
Disadvantages of Shrinkflation
– It is against the general interest of the customer
– It is perceived as an unfair practice.
– Shrinkflation gives rise to hidden inflation.
– It serves as a decline for famous brands.
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For more details, you can refer to our article –
https://www.wallstreetmojo.com/shrinkflation/
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