The Hidden Signals of Shrinkflation: Are You Getting Less for Your Money

 Have you ever opened a bag of chips and thought, “Didn’t this used to be… fuller? Why does the bag look half empty?”

Literally. The price? Unchanged. But the bag looks like it contains more air than chips. The chocolate bar looks shorter. The ice cream tub looks suspiciously “frosty” at the top. And no, you aren’t being paranoid. It’s called shrinkflation, and it's changing how markets work without you even noticing. Yet, why do consumers still purchase from the same brands? This is where market signalling comes into play. 

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How Market Signalling Masks Shrinkflation 

In a perfect world, we’d always get what we pay for. But businesses use tactics like shrinkflation to make us think we're getting the same value when we’re not. Instead of raising prices outright, companies reduce the quantity or size, like that bag of chips that seems to keep having more air than snacks, hoping consumers won’t notice (Wolfe, 2021). The key to pulling this off? Market signalling: the strategic way businesses convey product value to their consumers (Spence, 1973). 

 

This works because of asymmetric information. Consumers often lack full knowledge of product changes, allowing firms to use market signalling to maintain perceived value (Akerlof, 1970). Instead of openly raising prices, companies use signals like unchanged packaging or “NEW & IMPROVED” labels to make you think you’re still getting the same value. These signals shape consumer perception, often disguising the reality that you’re paying more for less. 

 

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The Psychology Behind Market Signalling

Market signalling isn’t just about packaging, it’s about influencing behaviour. Think about university degrees. Why do people try so hard to get one? Their value isn’t just in the education itself but in the signals, they send to employers about skills and dedication (Spence, 1973) and because it looks good on our CVs. Similarly, when a brand invests in high-end packaging, it’s not just for the aesthetics. It signals quality and reliability, even when the actual product has changed (Gabaix and Laibson, 2006). 

 

When shrinkflation occurs, businesses take advantage of it. They deceive customers into remaining loyal by signalling stability and consistency through recognisable branding and packaging while discreetly shrinking the product's size (Wolfe, 2021).

 

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The Silent Price Hike: Why Products Shrink

Inflation raises prices over time, and while consumers dislike price hikes, they’re visible. You see it when your favourite café suddenly starts charging £4.50 for a flat white. Shrinkflation, however, operates differently. It’s inflation’s quieter cousin, where costs creep up unnoticed, meaning you get less for the same amount of money (Baker et al., 2019).

Why do companies choose this route? It all comes down to us: the consumers. Research shows that two-thirds of UK shoppers prioritise price over size when making purchasing decisions (Insitetrack, 2025). Companies know that raising prices outright may drive shoppers away. Instead, they shrink products by a few grams, using market signalling to maintain a sense of normalcy (Chevalier and Gertner, 2007).

Most shoppers don’t closely check the product's weight or volume, they buy out of habit rather than reasoning since they assume consistency based on branding. Economists call this signal of stability (Gabaix & Laibson, 2006), now you can casually drop that into conversations to impress (or annoy) your friends.

 

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Shrinkflation in Action: From Chocolate Bars to Toilet Paper             

Take Toblerone’s infamous 2016 redesign: The chocolate brand increased the gaps between its iconic peaks, reducing the bar’s weight by 25% while keeping the packaging nearly identical (BBC News, 2023). Consumers noticed, and the backlash was instantaneous, highlighting the balance companies must maintain; if the signal is weak or consumers catch on, the strategy backfires.

But how does this affect you? Does it really matter if brands shave off a few grams? It does. Adding it all up, shrinkflation is a hidden way of draining your wallet because it’s everywhere: from toilet paper to ready meals. Tesco, for instance, cut 50 grams from some ready meals without lowering prices (The Grocer, 2023). A study found that when shrinkflation is factored in, the true price increase of products like paper goods was around 35% higher than it appeared (Schoen, 2024). That’s not a small change, especially for households already struggling with grocery bills. So next time you shop, take a closer look, you might be paying more for less!

 

 

 

 

 

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Can Market Signalling Be Used for Good?

Not all market signalling is deceptive. Some companies use it to build trust. Carrefour, a French supermarket chain, labels products affected by shrinkflation, warning customers when sizes shrink but prices don’t (BBC News, 2024). This kind of transparency strengthens consumer trust and pressures competitors to follow suit.

Some brands even highlight that their products remain the same size despite rising costs, signalling their commitment to fair value (Stiglitz, 2001). When used honestly, market signalling helps consumers make informed choices rather than misleading them.

 

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How to Stop Shrinkflation Tricks 

Want to beat shrinkflation at its own game? Here’s how:

1.      Check the price per unit: Look at the cost per 100g or item on supermarket labels to spot hidden price hikes.

2.      Use social media: Platforms like TikTok and Reddit are full of consumers exposing shrinkflation tricks (Business Insider, 2024).

3.      Support transparent brands: Reward companies that are upfront about changes or maintain consistent product sizes.

4.      Pay attention to product design changes: A new “sleek” bottle or a “modernised” container might just mean less product inside.

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Final Thoughts: Read Between the Lines

Market signalling isn’t inherently bad, it’s just how companies communicate value. But when used to mask shrinkflation, it shifts power away from consumers. Next time, don’t just look at the price, look at what the product is actually telling you. Are they being honest, or quietly making you pay more for less? The signals are there, you just have to know how to read them!

Why not learn more? Educaplay (2023) provides an interactive quiz to explore shrinkflation’s effects click here or try our own questionnaire here!

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Bibliography

Akerlof, G.A., 1970. The market for ‘lemons’: Quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84(3), pp.488–500.

Baker, W.E., et al., 2019. Consumer behaviour and shrinkflation: A strategic overview. Journal of Marketing Research, 56(5), pp.702–719.

BBC News, 2023. Toblerone reverts to original shape after backlash. BBC News. Available at: https://www.bbc.com [Accessed 10 March 2025].

BBC News, 2024. Carrefour labels shrinkflation products to warn customers. BBC News. Available at: https://www.bbc.com [Accessed 10 March 2025].

Business Insider, 2024. Social media exposes shrinkflation in food products. Business Insider. Available at: https://www.businessinsider.com [Accessed 17 March 2025].

Chevalier, J.A. and Gertner, R., 2007. Market signalling and the pricing of goods. Journal of Consumer Research, 34(2), pp.197–209.

Educaplay, 2023. Shrinkflation may leave fewer. Educaplay. Available at: https://www.educaplay.com/learning-resources/11961032-shrinkflation_may_leave_fewer.html [Accessed 26 March 2025].

Gabaix, X. and Laibson, D., 2006. Shrouded attributes, consumer myopia, and information suppression in competitive markets. The Quarterly Journal of Economics, 121(2), pp.505–540.

Graham, R., 2020. Shrinkflation: A review of its impact on consumer behaviour. Marketing Insights Quarterly, 17(3), pp.45–60.

Insitetrack, 2025. Consumer behaviour and price sensitivity report. Insitetrack. Available at: https://www.insitetrack.com [Accessed 13 March 2025].

Schoen, J., 2024. The sneaky economics of shrinkflation: Less product, same price. The New York Times, 1 March. Available at: https://www.nytimes.com/2024/03/01/business/economy/shrinkflation-groceries.html [Accessed 13 March 2025].

Stiglitz, J.E., 2001. Information and the change in the paradigm in economics. American Economic Review, 92(3), pp.460–501.

Wolfe, D., 2021. Inflation, shrinkflation, and consumer perception. Journal of Economic Behavior & Organization, 93, pp.34–56.