Shrinkflation touches every corner of the grocery store, from smaller bags of frozen vegetables to slimmer boxes of cookies. Companies have been using this tactic for decades to hide rising costs. Instead of raising prices, they sell less of a product for the same price. And the problem seems to be getting worse.
The way food is taxed in Canada adds another, even less visible dimension to shrinkflation.
“Watch out for shrinkflation. If (an item) is under 500 ml, you pay taxes. If you love Häagen-Dazs ice cream – and it’s 450 ml – you’re going to pay taxes on that. Same with granola bars. Only five in a box – that means it’s a snack. That means it’s taxable. Be careful out there.”
Ice cream and similar products, such as frozen yogurt and non-dairy alternatives, are taxable if they’re less than 500 milliliters or 500 grams and if they’re packaged or sold in single servings (such as ice cream sandwiches and bars). In the granola bar example, the same product packaged in quantities of six or more would be exempt.
The policy dates back 16 years (the Canada Revenue Agency issued GST/HST Memorandum 4.3 in January 2007), but has taken on new significance in the face of rising shrinkflation. Based on the idea of a single serving and the number of items sold per package, “hundreds” of once-exempt products will now be taxed. A fact that many people will not realize until they look at their receipts.
For example, if a manufacturer shrinks its ice cream, it may end up selling a snack instead of a staple food. If you were to put that shrunken tub of ice cream in your shopping cart, not only would you end up paying the same price for less food, but you’d also be paying taxes on it.
“It seems wrong to me to tax food other than food service. If you go to the grocery store and you buy a sandwich and a salad, fine. But everything else? I mean, some of that stuff goes into kids’ lunch boxes, for God’s sake.