Commenting on the ONS report that reveals that the size of thousands of goods is reducing but the price is remaining the same, David Jevons, a Partner at economics consultancy Oxera said:
"An economic environment with low inflation and wage growth has meant that today consumers are particularly sensitive to price rises. Over recent years more and more companies have therefore reduced the size of their product as way to control costs and increase their profit margins. However, our economic research in this area shows that fairness is important to consumers who may react strongly if they perceive the pricing strategy to be unfair. If consumers notice a smaller product only after they have bought it, they are more likely to switch away from that product in future because they feel deceived by the company. This is why firms need to be careful when shrinkflating. They may be able to avoid these pitfalls by ensuring that the product size doesn't shrink too much, too frequently, or by offering alternative smaller and larger versions. Some companies have already felt the Shrinkflation backlash in other countries. In 2015 a class action was brought against food manufacturer, McCormick, over the 25% reduction of pepper while the container stayed the same size.
"Shrinkflation shows not only how firms are using insights from behavioural economics to optimise their offering but also how consumers’ behaviour can show their dislike of perceived unfair pricing by punishing the firm".