Blaming Manufacturers and Stores for Inflationary Pricing is Cowardly, Wrong

President Joe Biden wants you to remember that your Valentine’s Day flowers and chocolates are more expensive than before. He claims the reason is “shrinkflation” and corporate greed.

In a video before the game Sunday evening, Biden mentioned companies selling “smaller-than-usual products where the price stays the same.” The president says he opposes the behavior and is “calling on the big consumer brands to put a stop to it.” 

Earth-shattering, Mr. President. There is a clear link between inflation, “shrinkflation,” and the Biden administration’s fiscal irresponsibility.

Shrinkflation is genuine. It occurs when companies shrink the quantity or size of their products while keeping the same price on the shelves, raising the real price effectively. Biden points to the sports drink and snack-food industries as two key culprits.

Have you noticed that your bottle of Gatorade has gotten smaller? Do you have more air in your chips bag? It isn’t a figment of your imagination. 

But the complaint from Biden would be funny if it wasn’t so pathetic. 

The Food and Drug Administration also regulates packaging practices like “slack fill,” the primary purpose of which is food preservation practices, and not ensuring against smaller portions as Joe Biden claims.

While it’s accurate that some sellers have reduced their package contents without changing prices, the adjustment happened in 2022.

Why did this happen in 2022? Hmm…that is the critical point.

The shrinkflation wave came as a response to the increase in inflation experienced by the U.S. beginning in 2021. It is baffling that Biden would make such an enormous deal about it now.

The Biden administration has been attempting to trick voters into merging the fact that inflation has flirted with the idea that prices are pretty much back to normal. That isn’t the case. 

Although inflation has declined, food costs have increased by an average of 20% since February 2021. Bread and chicken are up 25%, and rents are still elevated.

These increased prices explain why voters are frustrated about the economy despite low unemployment, rising wages, and positive economic growth.

The president’s rant against companies is a feeble attempt to distract us from the truth that his excessive policies for spending during the pandemic have caused inflation. 

Total federal deficits from 2020 to 2023 added up to $8.8 trillion. These are the most substantial peacetime deficits in the history of the U.S., both as a percentage of GDP and in nominal terms, and they include plenty of spending passed by the president after most of the pandemic crisis was avoided and the economy was in recovery.

The deficit dollars influx led to a 25.4% increase in American bank assets between 2020 and 2021, translating into a substantial increase in spending. Real estate loans increased by 121%, consumer loans by 19.2%, and total loans by 13.7%.

This was the most significant jump in lending since the time leading up to the Great Recession. In addition, a broad measure of the money supply grew $5.4 trillion between March 2020 and April 2022 — around a third of the country’s Gross Domestic Product (GDP) at that time.

Alternative explanations for inflation — including price gouging, supply-chain disruptions, and Modern Monetary Theory arguments- are linked to the wishful idea that government spending is neither a concern nor credible.

The same goes for blaming shrinkflation on greed by the companies as opposed to a government that pumped the economy full of excessive purchasing power and created an inflation crisis, leaving us to find ways to adjust.

While politicians are responsible for initiating the recent inflation, they also have the means to stop it. Prices might not return to 2020 levels, but Congress can enhance economic productivity and efficiency by rolling back regulations, reforming the tax code, moving toward more accessible policies, and possibly alleviating the family budget crunch by increasing incomes.

Congress might also finally get serious about cutting spending. That would be helpful to the Federal Reserve to tame inflation completely. Blaming businesses for price hikes due to inflation is both cowardly and wrong.