"Only Reduced Product Size" White House Criticizes 'Shrinkflation' Again

Shifting Responsibility for Perceived Inflation to Companies
Appears to Be Mindful of Voter Sentiment Ahead of Reelection Bid

Lael Brainard, Chair of the White House National Economic Council (NEC), criticized the so-called 'shrinkflation' tactic of reducing product size or weight instead of maintaining prices.

[Image source=UPI Yonhap News]

Amid President Joe Biden's reelection campaign highlighting the slowdown in inflation as a key achievement, Brainard partly attributed the persistent burden of perceived inflation to corporate responsibility.

On the 13th (local time), Brainard appeared on CNBC and said, "Prices of some essential items like eggs and milk have shown a downward trend," but criticized that "consumer brands have reduced packaging (size) instead of lowering prices to reflect the decrease in raw material costs." She explained that this shrinkflation tactic is increasing consumers' price burdens. She reiterated, "Shrinkflation is something the President is really paying attention to." She also emphasized, "Input costs are decreasing and supply chains are recovering," adding, "President Biden will continue to urge companies to ensure that these cost savings are felt by consumers."

President Biden also recently directly addressed shrinkflation. Through X, formerly known as Twitter, he stated, "While shopping for the Super Bowl, did you notice that prices stayed the same but the products were smaller-than-usual? People call this shrinkflation, which means companies are giving you less. I am urging major consumer brands to stop this practice." Earlier this month, ahead of the Democratic presidential primary, he also remarked, "High inflation is partly the result of corporate greed."

The Biden administration's sharp stance against corporate shrinkflation is influenced by voter sentiment. Unlike the administration boasting the inflation slowdown as a key achievement ahead of the election, American voters still cite high inflation as one of their biggest complaints. A recent survey conducted by Morning Consult last month showed that more respondents believed former President Donald Trump would handle inflation better than President Biden. In this context, Biden appears to be publicly criticizing recent corporate price increase tactics to partly shift responsibility for the high perceived inflation.

Brainard's remarks on this day drew attention as they came right after the release of the U.S. January CPI increase, which exceeded expectations. The year-over-year January CPI surpassed 3%, contrary to the initial forecast of entering the 2% range. Month-over-month, it rose by 0.3%, slightly exceeding Wall Street expectations. Regarding this, Brainard, a former Federal Reserve official, downplayed the significance of a single report and diagnosed that "inflation is in good shape." She also mentioned that the CPI increase rate has fallen to about two-thirds of its peak.