'˜Shrinkflation' fuels rise in cost of sweet treats
Shrinking chocolate bars have helped bump up the total cost of sweet treats over the past five years, new figures have revealed.
The Office for National Statistics (ONS) said so-called “shrinkflation” – where the size of a product is reduced and the price stays the same – has added 1.22 percentage points to the inflation rate of the sugar, jam, syrups, chocolate and confectionery category since 2012.
The statistics agency said chocolate manufacturers had blamed the drop in size on the rising cost of raw materials. However, the European import price of sugar sank to its lowest level on record in March this year, while cocoa prices have dropped sharply since record highs seen in 2015.
The ONS brushed aside the idea of Brexit being a key factor behind the falling size of chocolate bars.
It said: “Manufacturers’ costs may also be rising because of the recent fall in the value of the pound, leading some commentators to attribute shrinkflation on the UK’s decision to leave the European Union. But our analysis doesn’t show a noticeable change following the referendum that would point towards a Brexit effect.
“Furthermore, others (including Which?) had been observing these shrinking pack sizes long before the EU referendum, and several manufacturers have denied that this is a major factor.”
The statistics agency found 2,529 occasions where different types of products had changed size over the past five years, but said the difference had little impact on the headline rate of inflation.
It said the figure included products which were sampled more than once.
Toblerone made the news late last year when its US maker, Mondelez International, changed its distinctive mountain peak shape and made bars lighter because of rising ingredient costs. McVities’ digestives dark chocolate biscuits have dropped in size from 332g to 300g, while the price increased by 10p to £1.69p in Tesco, according Which?
The consumer website also said that Tropicana Creations Pure Premium Orange and Raspberry juice has also decreased from one litre to 850ml, but the price in Asda remained at £2.48.
A separate survey has revealed British households are spending less money on holidays, cars and white goods after suffering the tightest squeeze on their finances for three years.
The IHS Markit Household Finance Index (HFI) hit 41.8 in July, down from 43.7 in June, with a reading above 50 indicating growth.
Higher inflation and sluggish wage growth weighed on spending power, with the amount spent on big-ticket items such as holidays and cars falling at the fastest rate since December 2013.
Tim Moore, IHS Markit’s senior economist, said the “recent moderation” in inflationary pressures had yet to feed through to households.
He said: “The latest downturn in financial wellbeing was the greatest recorded for three years, reflecting reduced cash available to spend and lacklustre pay growth.
“There are signs that squeezed household budgets and worries about earnings have started to spill over to consumer spending patterns.
“Consumer aversion to spending on big-ticket items (such as cars, holidays and large appliances), appears to have been magnified by upward pressures on household debt, as well as stretched cash available to spend.
“The latest survey pointed to a renewed rise in household debt, alongside another increase in demand for unsecured borrowing.”
The UK economy’s lacklustre start to the year is expected to continue when official figures for the second quarter are released tomorrow. Economists are expecting gross domestic product (GDP) to expand by 0.3 per cent between April and June.