Shrinkflation 201: Shrinking Size, Rising Prices, and the Fight for Survival

Shrinkflation 201: Shrinking Size, Rising Prices, and the Fight for Survival

Nigerian consumers are experiencing a worrying trend called ‘shrinkflation’. This occurs when product sizes are getting smaller while prices remain the same or even increase. This is causing concern among consumers and economists alike.

Imagine a cunning force that shrinks your groceries while keeping the cost high. Shrinkflation combines ‘contraction’ and ‘inflation’, and while it may seem small at first, it has a major impact on purchasing power and the economy. This subtle change is causing growing concern among Nigerians.

Can you believe that a single yam tuber now costs an average of N6,500? A smaller bag of beans sells for N140,000 while a bag of long grain rice costs N80,000. Even a kilo of turkey is becoming unaffordable and the price of chicken is skyrocketing.

Also read: Global food prices remain stable in June

It is alarming that Nigerians are increasingly paying more or the same for significantly less, thereby reducing their purchasing power and shrinking their household budgets.

This situation disproportionately affects the average Nigerian who used to buy groceries in bulk to take advantage of economies of scale. They are now faced with the harsh reality that their basic salaries are no longer sufficient to cover the cost of essential groceries and food.

This comes at a time when many households are already grappling with inflationary pressures. In May 2024, headline inflation rose to 33.95 percent, while food inflation peaked at 40.66 percent, according to the National Bureau of Statistics (NBS). These startling figures reveal the growing financial pressure on Nigerian families.

Amid these economic uncertainties, incomes have not kept pace with rising prices, leaving consumers in a precarious position. As wages stagnate or grow more slowly than inflation, individuals and families are forced to make difficult choices about their spending priorities.

A disturbing revelation that goes beyond shrinkflation reveals a darker reality in the Nigerian food market. Unethical practices among food vendors, particularly in relation to rice, paint a grim picture of exploitation within the industry.

A recent investigation by BusinessDay revealed alarming findings that some rice sellers are using deceptive tactics by repackaging lower quality rice, mixing it with higher quality grains and then selling the rice at higher prices, averaging around ₦80,000 per bag.

But the deception doesn’t stop there. Shockingly, some vendors take it a step further by mixing three different types of rice into one bag, stacking them with the lowest quality rice at the bottom, the fair quality rice in the middle, and the highest quality grains on top. This practice is designed to maximize profits at the expense of unsuspecting consumers.

This begs the question: is the government complicit in these fraudulent practices? While some vendors cite economic challenges to justify reducing product quantities, their actions betray a more sinister motive.

Despite the difficult economic climate, the sale of adulterated rice at inflated prices shows a blatant disregard for consumer welfare and ethical business practices.

This downward trend in the chart reflects growing economic challenges, rising inflation and declining purchasing power. Consistently negative readings indicate that consumers are becoming increasingly pessimistic about the economic outlook and their financial situation. As confidence declines, potential declines in consumer spending and economic activity may occur.

“It is alarming how Nigerians find themselves paying the same amount or more for significantly less, thereby eroding their purchasing power and stretching their household budgets.”

A food vendor at Ikoyi NNPC axis lamented the continued increase in food prices. “Despite the increased cost of ingredients, I have maintained the unique taste of my dishes,” she said.

“The prices are really hard. I used to buy a cow leg for N3,000 but now it is N9,000 so I don’t sell it anymore. I am struggling to make N5,000 profit from goat meat. It has been tough for both my customers and me. While pepper prices are dropping, tomatoes remain expensive unless you buy the bad ones,” she added.

Ms Esther Abayomi, a working mother, expressed her concerns and said: “As a working mother trying to stretch every naira, shrinkflation is hitting us hard. I used to rely on buying in bulk to save money but now I get less for the same price.

“It’s frustrating because it feels like our hard-earned money is buying less and less when I go grocery shopping. With the rising prices and smaller sizes, it’s becoming harder and harder to provide for my family.

Also read: Nigerians say protecting farmers from herdsmen attacks is crucial to stabilizing tomato prices

“As a healthcare professional, I am deeply concerned about the rising cost of medical supplies and medications. It’s not just about higher prices; it’s an erosion of patients’ access to essential care,” said Dr. Aisha Bello.

“From a financial perspective, these price increases disrupt budgeting and impact healthcare outcomes. When medical supplies become more expensive, it puts pressure on hospital budgets and insurance systems. This makes it critical for policymakers to ensure transparency and fairness in pricing to protect patients from unnecessary financial burdens.”

This underscores the need for a more comprehensive approach to measuring inflation, one that includes both price changes and changes in product sizes. Failure to consider these factors can lead to misunderstandings about the economic pressures facing consumers and can result in misguided policy decisions.

Shrinkflation is not just a concern for working Nigerians; it also hits hard people like Adeolu, the furniture maker in the Olambe-Akute axis, and Ogun State. “Now that I am no longer actively making furniture, every naira counts,” he sighs.

“But with the way things are going, it feels like my savings don’t stretch as far as they used to. I’ve had to cut back and tighten my budget to make it work.

“It’s frustrating to see my purchasing power diminish, especially after years of hard work to secure my future. I worry about affording everyday items when prices keep rising and product sizes keep getting smaller. It’s a tough situation to be in.”

In response to these challenges, the Professionals Update Forum stressed the importance of prioritizing transparency in pricing practices by policymakers and companies to ensure consumer well-being.

Also read: Nigerians switch to cucumber and cayenne pepper as tomato prices rise

Ignoring the problem of shrinkflation can exacerbate existing economic inequalities and hamper efforts to achieve sustainable economic recovery and growth. The lack of transparency not only undermines consumer confidence, but also undermines the foundations of a resilient economy.

Addressing shrinkflation quickly and effectively is essential to fostering an environment conducive to fair economic progress. The professionals underlined the urgency of collective action to address this pressing problem.

Oluwatobi Ojabello, Senior Economic Analyst at BusinessDay, holds a BSc and MSc in Economics and a PhD (in prospect) in Economics (Covenant, Ota).