Muhammad Luqman

Rampant inflation in Pakistan has impacted all classes of the economy and even the upper strata of the population are bearing the brunt of price hikes.

Struck by the increase in the cost of production, driven by the hike in the prices of raw material, and keeping in view the contracting purchasing power of the public, industrialists have resorted to a phenomenon known as shrinkflation. Shrinkflation is indeed a concerning issue for Pakistani consumers.

It occurs when manufacturers reduce the quantity or quality of a product while maintaining its price, often citing increased raw material costs or other factors. In Pakistan, manifestations of shrinkflation may range from the shrinking of the size of products to the lowering of the standards of packaging material.

Fast moving consumer goods, especially the packaged food items, are the easiest to shrinkflate as the firms dealing in these sectors are the fastest to decrease the size of their products while retaining the prices. Over the past few years, the confectionery and baker companies have reduced the number of biscuits in small packs and half rolls in a bid to maintain the price of the commodity.

“The number of biscuits in a pack has gone down to 10 from 15 while the price is either same or even increased,” said Mian Shabbir Ahmad, owner of a provision store in Lahore’s upscale locality of Gulberg. Talking to WealthPK, he said that a number of companies cleverly introduced new variant of the same item to hide the fact that they have increased the price.

He said that shrinkflation was being witnessed in a lot of daily household items such as soaps, shampoos, food products, cold drinks, mineral water, detergents, frozen food and other commodities. He said that the size and weight of bath and beauty soaps has also been decreased. However, he said that products like meat, fruit, milk and vegetables cannot be shrinkflated.

“These are items that can only witness price hikes,” he said. Shrinkflation can have several negative impacts on consumers, including the reduced value for the money and potential health risks due to compromised quality. According to economists, shrinkflation can be particularly challenging for low-income households in Pakistan which may already be struggling to afford basic necessities.

“A manufacturing unit can’t afford to increase the prices of its items frequently as it will lose a huge chunk of consumers. As an alternative, the firms are forced to turn towards shrinkflation,” said economist Dr Qais Aslam. Talking to WealthPK, he said that consumers can safeguard their interests by being vigilant about product packaging and labelling and supporting local producers or alternative products that offer better value.

Aslam said that shrinkflation is a global phenomenon. “However, in other countries consumers’ associations are there to resist such actions by boycotting a particular product.” The industrialists’ associations generally justify the process, saying that the manufacturers can maintain the prices only by reducing the quantity.

“The ever-increasing prices of raw material, mainly due to rupee depreciation, are badly affecting the industrial sector,” said Zaki Aijaz, Vice-President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI). He said that the regulatory bodies like Pakistan Quality and Standards Authority, Punjab Food Authority and district administrations have to play their role in checking the quality of the products.

Credit: INP-WealthPk