Are groceries actually more expensive or are packages smaller?

The short answer is both. Shoppers are experiencing a double whammy of direct price increases (grocery inflation) and hidden size reductions (popularly known as shrinkflation).

Over the past several years, supply chain disruptions, rising labor costs, and agricultural challenges have driven up the raw cost of producing food. To cope with these rising costs, food manufacturers use two primary strategies:

1. Direct Price Hikes: The price on the shelf simply goes up. You pay more money for the exact same box, bag, or bottle.
2. Shrinkflation: The price stays the same (or even goes up slightly), but the amount of product inside the package decreases. For example, a cereal box might shrink from 18 ounces to 16 ounces, or a bag of chips might contain fewer chips and more empty space.

Because consumers are highly sensitive to price changes but rarely memorize the exact net weight of their favorite items, manufacturers often prefer shrinkflation to make cost increases less obvious.