With our economic woes looming overhead, consumers are trying to get the most bang for our buck. We sort through coupons, focus on sale shopping, and try to buy in bulk.
A few month ago Wealth Wire discussed a recent report explaining averaging families have been hit the hardest financially within the “essential basket of goods” which includes foods, fuel, public transportation and occasional gifts or treats.
The report indicated that since 2000, the price of basic purchases has jumped by 43%, which is a massive hike above even the general inflation our economy has been facing for the past decade.
The issue at hand is two-fold. The U.S. Federal Reserve continues to send the economy into an inflated hysteria by printing more money to attempt to dig its way out of the Great Recession. Ben Bernanke's quantitative easing has proven that the inflation rates in the U.S. will continue as long as the printing presses are running.
As of March, the inflation rate in the U.S. is 2.65%, down slightly from the previous 2012 months, but with QE1 likely to happen, and the rate continuing to stay over 2%, it looks as though for high prices of all our essential goods will be locked in for even longer.
But with inflation continuing to dictate our purchasing habits, we're also seeing deflation -- as in deflating package sizes for the goods we're buying. Grocery shoppers are seeing it more frequently than others as it seems that every product now has a “brand new look” for the “same low price.”
Granted that's not a lie, it's more of a bending of the truth. The price may remain the same, but the serving size is noticeably smaller. It's the classic profit margin bump for companies: smaller packages, same price.
Companies shave off a few ounces here, some additional inches there, all in an effort to tighten the belt and save some money while tricking consumers into spending the same for less of a product.
One writer points out that after switching grocery stores, they noticed several products with dubious packaging. A “half-gallon” container of orange juice from Tropicana is actually 59 ounces (5 ounces less than labeled size) while rolls of toilet paper are shorter and the “new-look” salad dressing is 4 ounces smaller.
“Consumers must realize that, as a group, they are easily manipulated, and companies are counting on that,” Donald MacGregor of consumer research firm MacGregor-Bates told MSN Money. “If a company reduces the price of something by 5% but gives you 10% less, you look at the price and think you are getting a bargain, but they have increased their profit margin by 5%. It looks good to you, but you're really paying more to get less.”
From MSN Money,
The manipulation involves playing with different units of measure, a problem consumers allow because they get familiar with a certain size and then assume it stays the same. Ask people in the orange juice aisle what, exactly, they are buying, and they will say "a half-gallon of orange juice," even if they are picking up a carton that holds less.
That's why people buy a "pint" of ice cream that is really 14 ounces; it may be the same-sized container with more air in the product, or it might just be fancy new packaging that is a tad smaller. The issue is that the manufacturer sets up the unit price in ounces, where the competitor selling a true pint does its unit pricing by the pint. That makes it hard for the average consumer to do a quick-look price comparison and know which is the better deal.
This happens within nearly every product we purchase at the grocery store. A bag of potato chips --as our faithfully furious consumer's video below (from EconomicPolicyJournal.com) shows-- can be bought at the same rate but be provided literally only 5 chips and crumbs. That's about a quarter per meager chip. How is that acceptable?
Take a look at your paper towels or toilet paper, specifically Bounty brand. The unit can be the standardized feet you buy or the “sheets”, which have no standard measurement. The manufacturer cuts the sheets smaller but takes a few feet of length off the roll to allow them to say they “have more sheets” – but actually less product for the same amount.
Go down your entire laundry list. Cereals like Cheerios and Wheaties are popular downsizers. Deli meat has one less ounce. Packages of cheese are trimming down on slices. Unilever's Skippy Peanuty Butter changed its flat-bottom jar by adding a dimple underneath to reduce the amount of peanut butter inside while charging the same and claiming the size of the jar is on the label.
Hellmann's mayonnaise reduced it's jar from 32 ounces to 30. Shedd's Spread Country Crock went from 48 ounces to 45. Even Dials soap bath bar decreased from 4.5 ounces to 4.
Kraft Brands' Oscar Mayer is one of the biggest culprits of packaging manipulation. They've been called out for increasing the amount of hot dogs in their package but reducing the size of them. They also have purposely packaged eight hot dogs but only sell rolls in packs of 10, to get consumers to purchase another pack of hot dogs.
So caveat emptor! The next time you go grocery shopping, take advantage of what's written in the smaller print for sizing (or in large print as Dreyer's CEO claims!). From USA Today,
As packaged goods makers' costs rise, they eventually have just two choices: raise prices or put less stuff in the package. While most are trying a price boost first, a growing number are shrinking the contents of their packages — from Frito Lay's chips to Dial soap to Dreyer's ice cream.
"We did not in any way try to hide this," insists Tim Kahn, CEO of Dreyer's Grand Ice Cream, which also makes — and has shrunk — Edy's. "The package-size change couldn't be any more visible."
Sadly we cannot impact the inflation Bernanke will throw at us, but we can enforce our purchasing power and ignore those who intend to screw us of our hard-earned money.
"Downsizing is nothing but a sneaky price increase," says Edgar Dworsky, editor of consumer website,Mouseprint.org, and former Massachusetts assistant attorney general in the Consumer Protection Division. "I'm waiting to open a carton of eggs and see only 11."
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