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It looks like this year’s tariffs have finally started to trickle down to consumer prices — at least for some things (toys, for one.) But as the monthly U.S. inflation rate ticks up from 2.4% to 2.7%, the big question is: How much more could prices go up, and how widespread could it get? The trajectory is unclear in part because companies who face these higher import taxes don’t have to pass the costs on to their customers. They could absorb them, taking a hit to their own profit. Or they might find U.S.-made versions of the materials they need, hopefully at a similar cost. A third option is to reduce the size of their products rather than charge more, a tactic that became popular among many consumer product companies when inflation spiked during the pandemic. It’s called “shrinkflation,” and experts say consumers could see a resurgence as the trade war threatens to reignite inflation. Actually, not just shrinkflation (smaller size, same price) but its even sneakier cousin, “skimpflation” (same size, lower-quality materials or ingredients.) In fact, many brands are already shaving net weight instead of hiking prices to deal with tariff cost pressures, according to DataWeave, which analyzes retail data. The average package reduction is 5%-6% with extreme cases reaching 15%-25%, the firm said in a June blog post. Shrinkflation can be an appealing solution for corporate America because price-sensitive customers may be less sensitive to a bag of chips weighing 15.5 instead of 18 ounces. And it’s unlikely they’ll even notice that a roll of toilet paper has 312 rather than 340 sheets. (FWIW, there’s nothing illegal about shrinkflation as long as companies are transparent about their sizes, although Democrats in the Senate did introduce a bill called the Shrinkflation Protection Act in 2024 that hasn’t gone anywhere.) So what? While economists at Goldman Sachs predict companies will pass 70% of their tariff costs onto consumers, that doesn't seem to be happening yet. But if a lot more tariff-related inflation is in fact just a matter of time, it could sneak up on us in various forms — some less obvious than others. This makes it all the more important to be on the lookout when you’re shopping. Consumer advocate Edgar Dworsky, a former Massachusetts assistant attorney general, tracks size and ingredient changes on his websites, ConsumerWorld.org and Mouseprint.org. Here are some examples:• A jug of liquid laundry detergent containing 132 ounces instead of 146 ounces (but still apparently covering us for the same 100 washes.)
• A roll-on deodorant in its same tall cartridge, but containing about 9% less actual deodorant.
• A box of macaroni and cheese that uses corn starch instead of butter and skim milk as a thickener. (Macaroni and Tease, anyone?)
Related Reading
Prices are Now Starting to Rise Because of Tariffs. Economists Say This Is Just the Beginning (CNN) The Battle to Keep Consumers Means Smaller Packs of Cookies and Chips (The Wall Street Journal via MSN) How Americans Deal With Effects of Tariffs Firsthand (Talker Research)Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
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