No, you’re not imagining it – some of your favourite sweets really are shrinking. In November 2016, Toblerone chocolate bars reduced in size by about 10%, provoking outrage online. And Maltesers, M&Ms and Minstrels have gone the same way.
It’s a phenomenon known as “shrinkflation” – where manufacturers reduce the package size of household goods while keeping the price the same.
At ONS we keep a close eye on prices, sending hundreds of data collectors into shops every month to record the prices of specific products (known as the “basket of goods”) to help us calculate the rate of inflation. As part of this process, we look out for pack sizes changing so that we can make sure we’re comparing like with like.
When we looked at the data from the last 5 years, we found that lots of the items we recorded had reduced in size or weight – mostly in the “food and drink” category.
Number of price quotes with recorded increase or reduction in package size, January 2012 to June 2017
Shrinking food and drink pack sizes isn’t new – we’ve seen it for at least the last 5 years.
Number of food price quotes with recorded reduction in package size, January 2012 to June 20171
Shrinkflation and inflation
Do these shrinking pack sizes contribute to inflation? After all, if you’re paying the same amount of money to receive less, your money is not worth as much as it used to be.
When working out our published inflation rates, we always adjust our prices data to take account of changing pack sizes. To look at the impact of shrinkflation, we recalculate the original price as if the pack size had always been the new size and calculate the rate again. If the two figures are different, we know that shrinkflation is contributing to inflation. (For technical details of how we do this, read our methodology paper.)
When we looked at the lead measure of inflation in our publications, known as CPIH, there was no discernible effect. That wasn’t very surprising – CPIH includes a huge sample of prices of goods and services from across the economy, including energy prices, housing costs, transport, health and education and much more. Food and drink is a relatively small proportion of this measure.
But even within the “food and non-alcoholic beverages” category, shrinkflation had no noticeable effect. This could be because the number of shrinking pack sizes is relatively small.
However, in one small subcategory, we found that the changing pack size had contributed 1.22 percentage points to the rate of inflation of those items since the beginning of 2012. That was the sweetest one: “sugar, jam, syrups, chocolate and confectionery”.
“Sugar, jam, syrups, chocolate and confectionery” index, published and non-adjusted, January 2012 to June 2017
Why are prices rising?
Most chocolate manufacturers have blamed the need to resize their products on rising raw material costs. In October 2016, Toblerone said: “We are experiencing higher costs for numerous ingredients… we had to make a decision between changing the shape of the bar, and raising the price.”
Mars, who make Maltesers, M&Ms and Minstrels, told The Independent: “We have been absorbing rising raw material and operational costs for some time, but the growing pressures mean that we can’t keep things as they are.”
Sugar and cocoa are two of the most important ingredients in confectionery and their price has fluctuated considerably in recent years. The European import price of sugar has been slowly falling since the middle of 2014 and in March 2017 it reached its lowest level since the International Monetary Fund records began in 1991.
Sugar: European import price, 2012 to June 2017
The price of cocoa reached a 5-year high in December 2015 (because of droughts in the three biggest cocoa-exporting countries) but has fallen sharply over the last year.
Cocoa beans: International Cocoa Organization cash price, US and European ports, 2012 to June 2017
Manufacturers’ costs may also be rising because of the recent fall in the value of the pound – leading some commentators to attribute shrinkflation to the UK’s decision to leave the European Union. But our analysis doesn’t show a noticeable change following the referendum that would point towards a Brexit effect. Furthermore, others (including Which?) had been observing these shrinking pack sizes long before the EU referendum, and several manufacturers have denied that this is a major factor.
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