President Biden on Thursday, during his annual State of the Union address, blamed corporations for rises in food prices. However, U.S. government data say otherwise.
“Shrinkflation,” President Biden said, has been the main culprit for lingering inflationary pressures. “Too many corporations raise their prices to pad their profits charging you more and more for less and less,” President Biden said. “That’s why we’re cracking down on corporations that engage in price gouging or deceptive pricing from food to health care to housing. In fact, snack companies think you won’t notice when they charge you just as much for the same size bag but with fewer chips in it.”
In response, the Senate Agriculture Committee Republicans released an analysis of U.S. government data showing that “shrinkflation” accounts for less than two percent of overall food price increases since 2021.
“While shrinkflation, the practice of downsizing product size or quanity while keeping the nominal price unchanged, has occurred, unfortunately for the administration, its economists at the Bureau of Labor Statistics (BLS) have revealed shrinkflation is not a significant culprit behind stubbornly high grocery prices.”
According to BLS, “while consumers may notice shrinkflation at the grocery store, it has a very small impact on the overall inflation picture they face.”
The full BLS report can be found here.
“Many links in the supply chain get food from American farmers to the kitchen table, but neither farmers nor food processors through higher commodity prices, concentration, or shrinkflation are to blame for higher food costs,” the committee concluded.
“Instead, too much federal spending by the administration overheated an economy still recovering from COVID-19 supply chain disruptions. Russia’s invasion of Ukraine further disrupted global energy and food supplies. Higher labor costs, higher energy, and higher transportation costs drove the costs of food service, food processing, and food distribution higher. Those are the real economics of food price inflation.”
The Senate Agriculture Committee’s post can be found here.
