Shrinkflation is when a product gets smaller but the price stays the same.
Shrinkflation is a significant legacy of Japan's years of deflation.
Academics will balk at price hikes despite margin pressures - many companies balk at them.
TOKYO, Dec 3, Reuters -- It was a chocolate biscuit that turned Masayuki Iwasa, a self-proclaimed penny-pincher with a sweet tooth, into one of Japan's most scrupulous chroniclers of shrinkflation. After Bourbon Corp reduced the package size, the newspaper delivery man and part-time stock trader was spurred to action around two years ago, after he noticed that the biscuits had also gotten smaller.
I was annoyed that they were shrinking and shrinking, said the 45-year-old Iwasa, whose website is www.neage. Jp price increases due to surreptitious price hikes.
He tracks the prices of some 400 goods and services - everything from washing powder to day passes at Tokyo Disneyland. The price stays the same and a product gets smaller, so the bulk of his website is dedicated to shrinkflation.
In Japan, the impact of deflation means it is hard to raise prices directly, so shrinkflation is a measure of last resort, Iwasa said. It's sneaky and it bothers me. While the practice is not unique to Japan - Mondelez International Inc sparked a global outcry when it reduced https: www.reuters. The US-Britain toblerone-IDUSKBN 1331 L 6 is the size of the Toblerone chocolate bar in 2016 -- its prevalence in the world's No. The 3 economy is a legacy of years of deflation.
Since consumer prices and wages barely budged for the last two decades, companies have become reluctant to increase prices due to fear of losing customers.
It's a headache for policymakers who want to see higher prices that are an essential part of a virtuous spending cycle that drives economic growth, especially as the population ages and declines.
There are signs that even Japan Inc may be nearing a tipping point, as soaring raw material costs and a weak yen drive up what companies pay for fuel, coffee beans and beef https: www.reuters. Article Japan-economy inflation-idCAKBN 2 H 402 I.
A recent Reuters poll showed that only 14% of Japanese firms have passed on higher costs to customers, but another 40% say they plan to, according to a recent poll. Food companies aren't willing to pass on costs, according to the survey, reflecting their fear of alienating shoppers.
As the price of raw materials increases, food manufacturers would like to raise prices, but it is difficult for them to do that, said Tsutomu Watanabe, an economics professor at the University of Tokyo.
Watanabe said that many companies will balk at outright price increases, just as they did in 2008 during another commodities surge, and in 2013 -- 2014 when the yen weakened sharply, leaving shrinkflation one of the few ways to protect margins.
In 2008, Bourbon reduced the number of Chocoliere biscuits in a 150 yen $1.30 packet to 14 from 16, citing higher costs, according to Iwasa's website, which uses company announcements, internet archives and other public information to track prices.
Bourbon shaved just under a gram off each of the confections, reducing the packet size to 110.6 grams from 122.5 grams.
The company did not respond to requests for comment.
This year, Kameda Seika Co was hit with criticism because it reduced the contents of packages of its kaki pi rice cracker and peanut mix by 5% to 190 grams.
The size was cut because Kameda could no longer offset rising commodity and transport costs with belt-tightening elsewhere, a spokesman told Reuters.
Calbee Inc said it will reduce the contents of some of its potato chips and Jagarico potato sticks by about 5% from next month. It will raise prices of more than a dozen potato chip products by up to 10%.
Satoshi Yoshida said the snack maker received more negative feedback from customers over the shrinkage than the price hikes.
He said that customers who had had such a negative experience may have a bad memory of it.
Lotte Co was criticised last year when it announced a renewal of its Bacchus chocolates in Japan, but did not mention that it had cut the package to 10 pieces from 12 according to posts online.
Spokesperson Yuichi Nitanai said the reduction was not confirmed, but declined to comment further.
An official at the Ministry of Internal Affairs said that the government's official consumer price index takes into account reduced package sizes.
The impact of shrinkflation may still not be fully reflected in that data, because the government index tends to use leading brands whereas shrinkflation is more prevalent at lesser known companies, said the University of Tokyo's Watanabe.
He said top firms have a certain amount of pride and don't want to be seen doing something that looks unattractive, such as shrinkflation.