Amid the backdrop of a flourishing U.S. economy, characterised by rising stock prices, job growth, and falling inflation rates, a peculiar phenomenon is troubling many Americans: “shrinkflation.”

This term refers to the practice of maintaining product prices while reducing the quantity or quality of the item, and it is becoming increasingly prevalent in various sectors, both online and offline.

However, the Consumer Price Index fails to account for this subtle shift in the economic landscape.

Shrinkflation is not limited to just the grocery aisle – it has permeated nearly every facet of consumer life.

Less value

While Americans may still be paying similar prices as they did a year ago, they often receive less value for their money.

One example of this can be seen in airline fares, which the Labor Department’s consumer-price index reported as having fallen by 9.4% in 2023.

However, this seemingly positive figure masks a more complex reality.

The calculation heavily relies on the “lowest available fare,” typically offered by budget airlines.

These airlines often require passengers to pay extra fees for services that were previously included in the ticket price, such as carry-on baggage and seat selection.

More for services

Consequently, flyers find themselves with less legroom and even face additional charges for beverages or snacks.

While some may appreciate the flexibility of differentiated pricing, many consumers are disheartened by paying more for services they once received as part of the base ticket cost.

Enjoying these “low” fares may be short-lived, as airline labor costs are on the rise due to newly negotiated pilot union contracts. Even low-cost carriers, traditionally known for their budget-friendly offerings, are grappling with financial losses.

In this new environment of normalized interest rates, businesses are compelled to prioritize profitability, inevitably leading to higher prices for consumers.