Consumers Push Back on Rising Prices Forces Big Brands to Act

By: Georgia | Last updated: Mar 07, 2024

American consumers are actively resisting price increases in various sectors, showing a notable shift in their purchasing habits. 

The reluctance to accept inflated prices is most apparent in grocery shopping, where individuals are opting for store brands over national brands, and in the automotive sector, where more consumers are choosing used cars over new. This shift is a clear indicator of the broader impact of inflation on consumer choices and the economy.

Impact on Food Prices

AP News reports that recent consumer behavior has forced large food corporations to reconsider their pricing strategies, slowing down the rate of price increases. Despite this change, experts do not anticipate a return to pre-pandemic price levels. 

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A green shopping cart viewed from above containing a small number of grocery items: a package of Vita Coco coconut water, a bag of Doritos chips, and a plastic container of mixed vegetable salad

Source: Wikimedia Commons

However, the moderated price increases in essential goods like food are expected to contribute to the overall cooling of inflation rates, offering some relief from the previous years’ high inflation spikes.

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Political Repercussions

The persistent high prices have become a significant issue in political discourse, affecting public opinion and possibly influencing upcoming elections. 

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A screenshot from a video featuring Joe Biden seated in a movie theater with red seats. He is dressed in a dark suit with a white shirt and a flag pin, and is gesturing with their right hand. The word 'SHRINKFLATION' is prominently displayed

Source: POTUS/X

President Joe Biden has highlighted corporate pricing practices and the phenomenon of “shrinkflation” as key concerns, suggesting a strong link between consumer discontent and political narratives, as noted in recent polls regarding the administration’s handling of the economy.

President Biden Addresses Shrinkflation Concerns

President Joe Biden has openly criticized food manufacturers for engaging in what he terms “shrinkflation” – a tactic where product sizes are reduced while prices remain constant. 

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Joe Biden in a striped shirt stands behind a microphone at an outdoor speaking event. He is mid-speech and appears to be addressing an audience

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During a Super Bowl-related video message, he highlighted this issue, stressing that “the American public is tired of being played for suckers,” pointing to a widespread concern among consumers about not getting their money’s worth.

Highlighting Subtle Consumer Deception

In his address, Biden pointed out that some companies might be reducing their product sizes incrementally, hoping the changes go unnoticed by consumers. 

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An array of snacks displayed on a white marble surface. The assortment includes a bowl of cornflakes with sliced strawberries, a pile of rolled oats spilling from a wooden scoop, ridged potato chips, Fritos, Doritos, granola bars with visible nuts, and chocolate-drizzled biscuits next to wafers

Source: Albertsons/X

He articulated this strategy as companies attempting “to pull a fast one by shrinking the products little by little and hoping you won’t notice.” 

Choosing the Super Bowl for Maximum Impact

The President chose the Super Bowl, an event with massive viewership, to voice his concerns about shrinkflation. 

Joe Biden dressed in a dark suit with a white shirt is seated, speaking and gesturing with his hands. He appears on a video with the caption 'It’s Super Bowl Sunday.' The background is a deep red with a blurred pattern

Source: The White House/Youtube

This strategic choice ensured the message reached a broad audience, emphasizing the significance he places on this issue. 

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Unnamed Brands in the Spotlight

Though President Biden did not specifically name any brands in his criticism, the video he released featured prominent products, implying the involvement of major companies in shrinkflation practices. 

A collection of various snack items arranged against a dark background with a caption overlay. The products include Turkey Hill Cookies 'N Cream ice cream, Breyers Natural Vanilla ice cream, a Family Size box of Wheat Thins, Goldfish baked snack crackers, a bottle of Gatorade Frost Glacier Freeze, a bag of Tostitos Hint of Lime, a pack of Keebler Chips Deluxe cookies, and a package of Double Stuf Oreo cookies. The caption reads 'bag of chips has fewer chips, but they're still charging us'

Source: The White House/Youtube

This inclusion of brands such as Gatorade and Oreo suggests the administration’s focus on larger corporations in its campaign against this deceptive practice.

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Biden's Personal Annoyance with Shrinkflation

The President expressed a personal grievance with the shrinking sizes of consumer goods, particularly ice cream, a product he professed to love. 

Joe Biden in a dark suit with a red tie is holding a microphone, speaking passionately with his hand raised

Source: Wikimedia Commons

He stated, “What makes me the most angry is that ice-cream cartons have actually shrunk in size.”

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Cookie Monster Echoes Consumer Frustration

NBC News reports that the character Cookie Monster from “Sesame Street” also voiced his dissatisfaction with shrinkflation on social media, stating, “Me hate shrinkflation! Me cookies are getting smaller.” 

Cookie Monster, a blue furry character with large googly eyes is holding several chocolate chip cookies. The character is centered against a plain white background

Source: MeCookieMonster/X

This sentiment was acknowledged by the White House, which responded to the post saying “C is for consumers getting ripped off.” 

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Senator Sherrod Brown Supports Cookie Monster's Stand

The issue of shrinkflation not only caught President Biden’s attention but also resonated with U.S. Senator Sherrod Brown of Ohio. 

Sen. Sherrod Brown with curly gray hair and a friendly expression is posing for the camera. He wears a navy blue suit with a red and blue striped tie and a lapel pin featuring an icon of a building

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He amplified Cookie Monster’s grievance over social media, posting, “Me too, Cookie Monster… People in my state of Ohio are fed up — They should get all the cookie they pay for.”

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Biden Criticizes Chip Manufacturers

The President extended his criticism to the makers of potato chips, speaking at a White House event.

Joe Biden wearing a dark suit, white shirt, and striped tie, is captured mid-speech with a raised fist

Source: Wikimedia Commons

He saidMany corporations are raising their prices, pad the profits, charging folks more and more for less and less. In fact, some of the small snack companies, you won’t — think you won’t even notice what they’re doing, when they charge you just as much for the same size bag of potato chips, only there’s a helluva lot fewer chips in it.”

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Senator Bob Casey's Report Highlights Specific Shrinkflation Examples

A report from Pennsylvania Senator Bob Casey’s office has brought to light concrete examples of shrinkflation affecting everyday products. 

A close-up image of a chocolate sandwich cookie with a creamy white filling

Source: Wikimedia Commons

It reveals that OREO cookie packages have seen a 6% reduction in size since 2019, and a family-size box of Wheat Thins has shrunk by 12% in weight.

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Beyond Snacks: Shrinkflation Hits Various Consumer Goods

The phenomenon of shrinkflation extends beyond just snack items. The report points out that even essential household items like Charmin Ultra Soft toilet paper have not been spared, experiencing a reduction of approximately 20 sheets per roll. 

A single roll of white toilet paper positioned on its side against a vivid blue background

Source: danilo.alvesd/Unsplash

Moreover, consumers are finding smaller quantities in a range of other products, including cleaning supplies, coffee, and frozen foods. 

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Navigating Economic Fluctuations Amid Inflation Concerns

Despite a notable decrease in inflation rates compared to two years ago, a Bureau of Labor Statistics report indicates a 3.1% rise in consumer prices this January from the previous year, which was contrary to expectations. 

A person with blonde hair wearing a brown coat is walking down a grocery store aisle carrying a blue shopping basket. On the left side of the aisle are shelves stocked with various bottles of olive oil and vinegar

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However, experts urge caution in interpreting these figures hastily. Susan Collins, president of the Federal Reserve Bank of Boston, saidThe path will continue to be bumpy, and we should not overreact to individual data readings.”

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The Ongoing Dialogue on Consumer Value

As the dialogue on shrinkflation continues, it remains to be seen how food companies will respond to the criticisms laid out by President Biden and echoed by public figures and consumers alike. 

A well-lit supermarket aisle featuring a variety of products on shelves. The left side of the aisle displays an array of colorful cereal boxes, while the right side is stocked with bottles of orange juice

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The administration’s focus on this issue signals an ongoing commitment to addressing consumer concerns in the marketplace, ensuring that value, fairness, and transparency remain at the forefront of corporate-consumer relations.

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Inflation Psychology and Consumer Behavior

Analysts highlight the distinction between the current inflation scenario and past inflationary periods, noting a lack of an inflationary psychology among consumers. 

A person unloading bulk grocery items from the back of a silver minivan. The individual is obscured by the large items they are carrying, including a multi-pack of Ritz crackers and several large packs of paper towels

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The proactive stance against accepting higher prices reflects a strategic shift in consumer behavior, aiming to prevent a self-perpetuating cycle of inflation where anticipation of future price increases fuels current spending.

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A Shift in Loyalty at Panera Bread

NBC News tells the story of Brooke Benson, a long-time patron of Panera Bread, who changed her dining habits due to a noticeable price increase at her local outlet. The price of her favored soup jumped significantly over three years, prompting her to seek alternatives. 

A close-up image of a person eating a bowl of tomato soup with croutons from Panera Bread. The white bowl with the Panera Bread logo is held in hands, and a spoon is being used to eat the soup

Source: panerabread/X

Her experience reflects a growing trend where consumers, feeling the pinch of price increases, are exploring more affordable options, impacting even established customer relationships with brands.

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The Inflation Challenge and Company Responses

As inflation reached a four-decade high, companies cited rising costs for materials and labor as reasons for hiking their prices. 

A brightly lit McDonald's restaurant at night featuring its iconic golden arches logo. The establishment has a 'PlayPlace' and a 'Drive Thru' sign visible, with several cars lined up at the drive-thru

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However, with the inflation rate decreasing to 3.1%, businesses are finding that continuous price increases may no longer be sustainable without risking customer loss. Fortune notes that major brands like McDonald’s are now emphasizing affordability, recognizing the need to cater to budget-conscious consumers.

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Consumer Spending Shifts Impact Sales

The MTY Food Group, operator of over 70 brands, observed a slight decline in same-store sales, attributing it to consumer pushback against price increases. 

An illuminated Wetzel's Pretzels neon sign mounted above a stairway in an indoor shopping mall. Two people are standing at the balcony behind the sign, beside an American flag

Source: Wikimedia Commons

CEO Eric Lefebvre emphasized the importance of not alienating customers with steep price hikes. Similarly, General Mills noted a sales drop in its pet food sector, acknowledging an overestimation of consumer willingness to pay more for products.

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The Pricing Dilemma Facing Kraft Heinz

Kraft Heinz experienced a sales downturn, suggesting a consumer threshold for price tolerance. 

The image shows the Kraft Heinz logo in bold, three-dimensional letters mounted on the exterior of a building. The facade of the building has reflective windows that show the reflection of other buildings

Source: Wikimedia Commons

After a significant price increase in the previous year, the company plans a modest adjustment this year, indicating a strategic pivot towards more cautious pricing to avoid losing customers.

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Home Improvement Spending Cools Off

Home Depot anticipates 2024 being “a year of continued moderation”, following a surge in home renovation projects during the pandemic.

Exterior view of The Home Depot store under a blue sky with fluffy clouds. The store's large orange sign is mounted on a beige facade, with a bright American flag flying above. In front, a display of lawn mowers and outdoor equipment is lined up for sale, and a customer is seen approaching the store entrance

Source: Wikimedia Commons

This trend points to a broader consumer behavior shift, with individuals becoming more selective and less inclined towards high-cost purchases in a post-pandemic economic environment.

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Price Moderation Benefits Shake Shack

Shake Shack’s strategy of moderate price increases led to positive sales growth, demonstrating the potential benefits of a balanced pricing approach. 

A close-up image showcasing a variety of fast food items on a tray. The foreground features crispy crinkle-cut fries and two types of burgers with visible toppings such as cheese, lettuce, and tomato. In the background, there's a chicken sandwich, onion rings, and a milkshake. Packets of ketchup are also visible

Source: shakeshack/X

NBC News notes that this experience contrasts with other brands that have faced backlash for more aggressive pricing tactics, suggesting a nuanced understanding of consumer price sensitivity can yield favorable results.

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Walmart's Pricing Strategy Sees Positive Results

Walmart’s decision to lower certain prices, like its French bread, has been met with strong customer approval.

A clear day with a bright blue sky as the backdrop for a large Walmart store sign. The sign, featuring the distinctive white lettering and yellow spark on a blue background, is prominently displayed atop a tall post

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The retailer’s efforts to offer value reflect a broader industry trend towards price sensitivity and the importance of aligning pricing with consumer expectations.

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The Role of Consumer Power in Inflation Dynamics

AP News reports that Federal Reserve officials recognize the growing consumer resistance to price hikes as a critical factor in the projected decline of inflation rates. 

The front view of the Federal Reserve building under a cloudy sky. The structure features tall pillars and a large eagle sculpture perched above the central entrance. The building's facade is etched with the words 'Federal Reserve', and a flag flies prominently atop a flagpole

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The heightened price sensitivity among consumers is playing a pivotal role in shaping the economic outlook, with expectations of a more stable and predictable inflation trend in the near future.

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