Although many argue that the United States has some of the largest portions in the world, others have begun to notice an extreme reduction in prepackaged foods.
There's nothing more relatable than buying a bag of chips to enjoy on a Friday night while you're sitting on the couch watching TV after a long work week.
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However, upon opening the bag, it is always disappointing to discover that most of it is filled with air and only a third contains shavings.
Lately, it seems like the packages are getting smaller and the insides are even emptier, but Americans are still paying the same prices or more than before.
Well, unfortunately this assumption might be correct.
Lawmakers are cracking down on 'counterinflation'
On February 28, Senator Bob Casey of Pennsylvania introduced the Shrinkage Prevention Law crack down on large corporations that offer less product per package without reducing prices. The law allows the Federal Trade Commission to punish companies that engage in these practices.
“Corporations are trying to trick us by reducing the size of their products without reducing their prices; anyone on a tight budget sees this every time they go to the grocery store,” Senator Casey said in announcing the bill.
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According studies Compiled by Senator Casey, inflation rose 14% from June 2020 to June 2022, while corporate profits grew more than 74%.
Additionally, corporate profits accounted for all inflation from July 2020 to July 2021 and 41% of all inflation from July 2020 to July 2022.
However, manufacturing costs have increased due to inflation, making ingredients and packaging materials more expensive than before, which may justify why these companies have chosen to downsize products rather than increase prices.
Elizabeth Warren expresses frustration with 'counterinflation' in letter
Democratic Senator Elizabeth Warren of Massachusetts and Representative Madeleine Dean of Pennsylvania have also grown tired of this reduction in prepackaged foods and expressed their frustrations by sending a letter Sunday to Coca-Cola. (IS) PepsiCo (ENERGY) and general mills (NEXT) calling on food and drink giants to stop “counterinflation”.
Both lawmakers accuse three of the largest food and beverage companies in the United States of using deceptive tactics to increase their profits by reducing the size of their products and selling less content to their customers for the same or higher price than before the reduction.
Senator Warren and Representative Dean also accused food and beverage giants of bankrolling Trump's 2017 election. tax billwho promoted tax cuts, because they wanted to increase profits by raising prices.
According to the letter, five years after the 2017 tax cut bill, all three companies paid lower taxes, much less than many ordinary citizens pay.
As stated in the letter, in 2017, General Mills made $12 billion in profits and paid an average tax rate of 14.8%, Coca-Cola made $13.4 billion in profits and paid about 13 .5% in taxes, and PesiCo made profits of $22.4 billion and paid tax rates of around 15%.
Food and beverage companies stealthily reduce the size of their products
In the letter, Senator Warren and Representative Dean backed up their claims by revealing the tactics of companies promoting “counterinflation.”
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In 2021, General Mills reduced the size of several cereal boxes by a few ounces and charged them the same price. Just a few months later, the company raised its prices five times, leaving customers with less product content and much higher costs.
Coca-Cola also joined the shrinking trend by selling fewer sodas for the same price, while PepsiCo reduced its Gatorade bottles from 32 ounces to 28 ounces and sold them at the same price.
“Reducing the size of a product to scam consumers with the price per ounce is not innovation, it is exploitation,” said the letter to PepsiCo CEO Ramón Laguarta. according to NBC News.
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