In letter, Casey calls on the Government Accountability Office, an independent watchdog, to examine effects of corporate greed on American consumers
Casey: “The American people should not have to tolerate corporate executives squeezing them for every last nickel and dime”
Washington, D.C. – Today, U.S. Senator Bob Casey (D-PA) sent a letter to the Government Accountability Office (GAO), urging the oversight agency to examine the effects of corporate greed on American consumers. In recent months, Senator Casey has released a series of reports showing that working families across our Nation are paying higher prices due to greedflation, where big corporations use economic turmoil as cover to raise prices beyond the rate of inflation, and shrinkflation, which occurs when big corporations reduce product size without adjusting prices or notifying consumers. The letter requests that GAO examine how greedflation and shrinkflation are affecting consumers and evaluate transparency measure that the federal government can implement to help consumers identify both practices.
“Corporate strategies to hide price increases and raise the unit cost of everyday items like food and household products are hurting families in Pennsylvania,” wrote Senator Casey. “The American people should not have to tolerate corporate executives squeezing them for every last nickel and dime.”
According to Senator Casey’s greedflation report, from July 2020 through July 2022, inflation rose by 14 percent while corporate profits rose by more than 74 percent during the same period—five times the rate of inflation. Research by the Federal Reserve found that corporate profits contributed a large percentage to inflation in the first year of the pandemic, including accounting for all the inflation from July 2020 through July 2021 and 41 percent of all inflation from July 2020 through July 2022.
Senator Casey believes more must be done to hold corporations accountable for taking advantage of American workers and their families and has a plan to lower costs for working families by following four overall goals: put more money in the pockets of working families; make big corporations pay their fair share; fight unfair corporate price gouging; and take on corporate monopolies to increase competition and lower costs.
Read the full letter to GAO here or below:
The Honorable Gene L. Dodaro
Comptroller General
United States Government Accountability Office
441 G Street NW
Washington, D.C. 20548
Dear Comptroller General Dodaro:
I write to request that the Government Accountability Office (GAO) examine the consequences of corporate greed on American consumers. In recent months, I have released reports showing that working families across our Nation are paying higher prices due to greedflation, whereby big corporations use economic turmoil as cover to raise prices beyond the rate of inflation, and shrinkflation, which occurs when big corporations downsize products without adjusting prices or notifying consumers. These corporate strategies to hide price increases and raise the unit cost of everyday items like food and household products are hurting families in Pennsylvania. And consumers are noticing, as evidenced by a November 2023 poll in which 50 percent of U.S. respondents noticed food product sizes getting smaller, while price remained the same. The American people should not have to tolerate corporate executives squeezing them for every last nickel and dime. Accordingly, I ask the GAO to examine how greedflation and shrinkflation are affecting consumers and evaluate transparency measures the federal government can implement to help consumers identify both practices.
In November 2023, I released two reports that found corporate profits rose five times as fast as the rate of inflation from July 2020 to July 2022, and accounted for a significant portion of inflation during America’s post-pandemic recovery. The price of food increased faster than other products, including price hikes pushed by four large meat producers that, combined, have paid nearly $500 million to settle lawsuits over price-fixing claims in recent years. My reports showed that greedflation is hurting middle-class families even as it lines the pockets of executives and wealthy shareholders. For example, the Coca-Cola Company increased the price of its products by 11 percent over the course of 2022. The company’s chief executive said at the time that Coca-Cola had “earned the right” to hike prices for consumers. Coca-Cola’s rival, PepsiCo Inc., also significantly increased prices. In April, PepsiCo stated that it had increased prices 16 percent during the first quarter of 2023. On an earnings call, executives went a step further: PepsiCo’s chief executive told investors that even though inflation was declining, their prices would not, a message reinforced by the company’s chief financial officer, who said in a television interview that “consumers generally look at our products and say ‘you know what – they are worth paying a little bit more for.’” These aggressive price increases led a major European grocer with more than 12,000 stores in 30 countries to stop carrying PepsiCo’s products this month in France, Spain, Belgium, and Italy.
In addition to these public pronouncements of price hikes, corporations are also engaging in shrinkflation by downsizing products without adjusting prices or clearly notifying consumers. Shrinkflation has become so common that Merriam-Webster added the word to its dictionary in 2022. Experts have found that corporations use a variety of methods to carry out shrinkflation, many of which are hard for everyday consumers to identify. For example, corporations may reduce the size of containers by a few ounces, add air to a package, or even increase the divot at the bottom of a jar, all while maintaining the same prices – or even raising them. Unfortunately, product sizes do not typically return to normal with time. If shrunken products are later “upsized,” corporations often advertise them as “bonus buy” or “more for the money,” and sometimes sell them at a higher price.
Companies have used shrinkflation for a variety of products, including baby formula, toilet paper, snack food, paper towels, beverages, cleaning products, and even pet food. In December, I sent letters to major trade associations including the Consumer Brands Association, SNAC International, the American Beverage Association, and the Personal Care Products Council, pressing their leadership on instances of shrinkflation among member companies’ product portfolios. In one such case, PepsiCo subsidiary Frito-Lay North America reduced the size of Doritos bags by five percent without adjusting the price. The company publicly acknowledged the change, saying, “we took just a little bit out of the bag so we can give you the same price and you can keep enjoying your chips.” In another instance, Procter & Gamble, the maker of Dawn Ultra and Dawn Ultra Platinum dish soap, opted to reduce a 7-ounce Dawn bottle to 6.5-ounces but did not lower the price. Similarly, a small box of Kimberly-Clark’s tissue brand, Kleenex, had 65 tissues compared to the 60 tissues in a box today. Rather than paying less and getting more, the veiled corporate tactics of shrinkflation lead consumers to unwittingly pay more and get less, increasing day-to-day costs and reducing the buying power of working families.
Given the ongoing economic harm greedflation and shrinkflation pose to consumers, I ask the GAO to examine and report on the following issues:
- How has corporate use of greedflation and shrinkflation affected the price and unit price of consumer products, including food and household staples? What are common methods that corporations use to shrink the size of products without consumers noticing? How has the frequency of shrinkflation changed over time, and how has the use of shrinkflation affected gross margins of products?
- How do greedflation and shrinkflation affect American consumers? Please consider consumer awareness of changes in product cost and size, consumer adaptation to product changes, and the impact of corporate consolidation on the ability of consumers to adapt.
- Public and private actors have adopted commonsense steps that can help protect consumers from greedflation and shrinkflation, according to public reports. For example, grocery stores typically list unit prices for products; a federal agency reports that 11 states have mandatory unit pricing provisions; and France is implementing a label requirement for products that have been reduced in weight. Please provide information about best practices identified from governmental and non-governmental entities to protect consumers from greedflation and shrinkflation, and to bring transparency to those corporate tactics. To what extent has the federal government instituted consumer protections from greedflation, shrinkflation, and other covert or overt corporate price increases?
Thank you for your attention to this important issue. If you or your staff have any questions, please contact Corey Husak on my staff at 202-224-6324.
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