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Inflation: consumer advocates complain about price increases due to packaging tricks

2022-08-19T07:54:15.980Z

Sometimes only the content is shrinking or the entire pack is getting smaller: In view of the higher costs, according to consumer advocates, companies are increasingly resorting to hidden price increases. Two brand manufacturers speak openly.



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Shopping in the supermarket: be careful with new packaging sizes

Photo: Robert Michael / dpa

Anyone who will be reaching for familiar products in the food trade in the next few weeks should take a closer look than usual.

Because it is quite possible that the familiar pack or even the contents of the pack have shrunk, even if the price is the same as before.

"We are currently experiencing the first wave of such hidden price increases," said Armin Valet, food expert at the Hamburg consumer center of the dpa news agency.

"But I think the high point is yet to come."

Valet has been observing for years how manufacturers and retailers use pack sizes to disguise price increases and chooses a deceptive pack of the year every twelve months.

At the moment there are a lot of complaints about such tricks at the Hamburg consumer center, said Valet.

The background: Food prices are rising significantly.

According to the Federal Statistical Office, food and non-alcoholic beverages were 14 percent more expensive in July than a year earlier.

Increased commodity prices are just as noticeable here as higher energy costs or additional expenses for logistics as a result of the corona pandemic and the Ukraine war.

The temptation for manufacturers and retailers to hide the price increase is great.

If the pack shrinks a little, it's often less noticeable than if the price goes up.

There's even a word for it: »shrinkflation« - a combination of the English word for shrink and inflation.

“We will see this more often in the future than in the past,” says marketing expert Martin Fassnacht from the WHU business school.

The reason: retailers and manufacturers were reluctant to exceed the usual price thresholds, such as 1.99 euros.

"If such a threshold is exceeded, a product suddenly appears significantly more expensive and there is a risk that the sales volume will collapse drastically," says Fassnacht, describing the problem.

There are currently plenty of examples of such “shrinkage cures”.

Haribo, for example, recently reduced its gold bear bag from 200 to 175 grams. The recommended price of 0.99 cents remained the same - despite 12.5 percent less content.

Since the beginning of the year, the company has been confronted with extraordinarily rising costs for ingredients, but also for foils, packaging materials, cardboard boxes as well as energy and logistics "in the high double-digit range", Haribo justified the step.

The company is adjusting packaging sizes and price to remain affordable.

"It was important to us that we no longer have 'air' in the bag, i.e. keeping the size of the bag, but also making the bag visibly smaller," said a company spokesman.

As a result, the reduction in the filling quantity is clearly recognizable to customers.

Branded goods manufacturer Henkel also took a similar approach with its fabric softener Vernel.

"Since we were not able to fully absorb the cost increases in some cases, we decided to partially adjust the filling quantities of our products," the company reported.

The snacks manufacturer Intersnack was also forced to "adjust the filling quantity of the ültje peanuts" due to the increase in costs.

But consumer advocates have also encountered shrinking package contents for jam, margarine, crisps and even frozen pizza in recent weeks.

»I thank you that there is still a lot to come«

That's not forbidden, admits Valet.

But of course it is a trickery at the expense of the customers.

According to him, it is striking that supermarkets and discounters are increasingly resorting to such hidden price increases for their own brands.

This was rather a rarity in the past.

According to the Hamburg consumer advice center, the frequency of so-called double price increases on the association's list of deceptive packaging has also increased.

This means products in which not only the filling quantity has been reduced, but the price has also been increased by retailers.

While this has affected an average of 18 percent of the articles recorded in the past two years, it was already around 35 percent in the first half of 2022.

Consumer advocate Valet expects that many shrinkage cures for the packs are yet to come.

He calculates that retailers need about six months in advance to change the labels and sell off the old goods.

"I thank you that there is still a lot to come."

Producer prices are rising at record speed

Current figures from the Federal Statistical Office also indicate that there will be no quick relaxation in consumer prices.

Because the German manufacturers surprisingly raised their prices at record speed in July.

Producer prices rose by an average of 37.2 percent, mainly because of expensive energy.

"This was the highest increase compared to the same month last year since the survey began in 1949," as the Federal Statistical Office announced on Friday.

Producer prices increased by 5.3 percent from June to July.

"This is also the highest increase compared to the previous month since the survey began," it said.

Producer prices are considered to be the forerunners for the development of general inflation.

In the statistics, the prices are listed from the factory gate – even before the products are further processed or sold.

In July, consumer prices were 7.5 percent higher than a year earlier, after the inflation rate had reached 7.9 percent in May, the highest level since the winter of 1973/1974.

The fuel discount and nine-euro ticket are currently driving down inflation for consumers, but this state aid will expire at the end of the month.

Experts are therefore anticipating higher inflation rates in autumn.

Energy is a price driver

The main reason for the sharp rise in producer-level inflation is energy, which has cost significantly more since the start of Russia's invasion of Ukraine on February 24th.

Here, producer prices were 105.0 percent higher than in July 2021.

Natural gas rose in price by 163.8 percent and electricity by 125.4 percent.

Petroleum products cost 41.8 percent more than a year earlier.

Light heating oil was more than twice as expensive as a year earlier (up 107.9 percent), while motor fuels were 31.6 percent higher.

There were also high price increases for intermediate goods, especially metals, fertilizers and animal feed, as well as industrial gases and packaging materials made of wood.

Food prices rose by a good 21 percent.

Consumers are already restricting themselves

According to a recent survey, most consumers in Germany have adapted their purchasing behavior to rising prices: Seven out of ten respondents (70 percent) state in the current "Germany trend for the ARD morning magazine" that they are already using less energy in order to reduce costs - again more than in April of this year (64 percent).

Almost half buy less in everyday life (47 percent).

The proportion of those who are more economical in their leisure time and, for example, visit restaurants, cinemas and leisure facilities less frequently, is even slightly higher (50 percent).

43 percent of Germans say that they will limit their vacation trips this year.

Restrictions on spending are particularly noticeable in less financially strong households.

Around two thirds (66 percent) of those surveyed with a rather low income (household income up to 1500 euros per month) state that they shop less in everyday life, visit restaurants, cinemas and leisure facilities less often (67 percent) and limit their vacation trips this year (59 Percent).

In comparison, about half of those surveyed from middle-income households (household income 1,500 to 3,500 euros per month) do so.

When it comes to reducing energy consumption, on the other hand, there are no major differences between the income groups.

mmq/dpa/Reuters

Source: spiegel

All business articles on 2022-08-19

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