Card data: People crossing a street at Westminster, London. Things are looking up for retailers, as spending on cards bounced back from two months of decline in August to rise 1% year-on-year, according to Barclays. — Reuters
LONDON: Consumers in the United Kingdom are noticing “double dip shrinkflation”, where products such as chocolate and crisps have reduced in size multiple times as suppliers try to protect their profits.
A survey by Barclays found eight in 10 shoppers had been affected by so-called shrinkflation, with over a quarter noticing products becoming smaller more than twice – most commonly on snacks, including biscuits and sweets.
It also revealed that almost half are splashing out on small luxuries such as cosmetics and sweet treats to brighten their mood, a phenomenon often seen during times of belt tightening and known as the lipstick effect.
Barclays said its card data showed spending at health and beauty retailers up 7.3% year-on-year, the fastest growth since early 2023.
The figures suggest that UK consumers and businesses are still feeling a hangover from the worst cost-of-living crisis in a generation even as it fades.
While real wages are growing at the fastest pace in almost three years, they are still well below their peak.
Shrinkflation has hit a number of popular products in the UK, with recipes also tweaked to save on costs.
A Which? investigation earlier this year found that products, including Bisto chicken gravy granules, Colgate triple action toothpaste and Lurpak butter, have shrunk while remaining the same price or increasing in cost.
Companies may start to use shrinkflation less due to easing cost pressures, however.
Food inflation in the United Kingdom has tumbled from double digits to 1.4% over the last year, and central banks across the world are cutting interest rates.
“We’re also seeing an emerging trend of consumers indulging in retail therapy for mood-boosting pick-me-ups,” said Karen Johnson, head of retail at Barclays.
“This is a much more immediate version of the long-running trend of consumers making room in their budgets for memorable experiences, like tickets for next year’s Oasis tour,” she said.
Figures from Barclays and the British Retail Consortium (BRC) both showed barbecues and “picnic weather” boosting retail sales in August, meanwhile.
Spending on cards bounced back from two months of decline in August to rise 1% year-on-year, according to Barclays.
Separately, the BRC also said that total retail sales were up 1%, driven by food as consumers took advantage of the sunny weather.
It marked the strongest performance in the BRC’s measure since March.
“Sales growth picked up in August, particularly for food as people came together to host barbecue and picnic gatherings for family and friends.
“Also, for summer clothing, health and beauty products as people prepared for trips away and summer social events,” said Helen Dickinson, chief executive at the BRC. — Bloomberg
