President Joe Biden has made calling out "shrinkflation" a top priority as he aims to address rising prices in the country. In his recent State of the Union speech, Biden highlighted the practice of companies subtly reducing product sizes while charging the same amount, ultimately resulting in higher prices for consumers.

Shrinkflation has become a matter of concern for everyday people who are feeling the pinch of higher grocery and housing prices. Biden is using this issue as part of his strategy to shift the blame onto big business and demonstrate his commitment to fighting for the interests of everyday Americans. The president featured a video on Super Bowl Sunday, where even the beloved "Sesame Street" character Cookie Monster complained about smaller cookies.

Despite the country's low 3.7% unemployment rate and a record 16 million applications to start new businesses, voters remain fixated on the higher cost of living, particularly after inflation hit a four-decade high of 9.1% in June 2022. While inflation has since decreased to 3.1% annually, shoppers continue to worry about paying premium prices at supermarkets.

Economist Ryan Bourne of the Cato Institute emphasized that Biden's focus on high grocery prices is politically vital, as consumers easily recall paying more than they did in 2019. However, Bourne cautioned that companies might have simply raised their prices without resorting to shrinkflation, which could have further upset consumers and damaged the president's approval ratings on the issue.

During her GOP response to the State of the Union, Senator Katie Britt of Alabama solely attributed the inflation problem to President Biden's reckless spending, claiming it led to the worst inflation in 40 years. Republicans have argued that Biden's $1.9 trillion pandemic relief package was responsible for the price hikes, but global factors, such as broken supply chains and higher energy and food prices after Russia's invasion of Ukraine, have also contributed to the issue.

A recent report by the liberal economic advocacy group Groundwork Collaborative analyzed inflation data and found that shrinkflation played a meaningful but modest role in driving up prices since 2019. The report revealed that reduced packaging accounted for over 7% of the increase in coffee prices, about 10% of higher prices for snacks and household paper products, and approximately 7% of inflation in ice cream prices.

The report also highlighted that while companies may have masked the higher prices from customers, they were transparent in their investor earnings calls. Some companies, such as General Mills, emphasized that reduced package sizes were a cost management strategy that also addressed climate change challenges.

To combat shrinkflation, Senator Bob Casey of Pennsylvania introduced a bill that would prohibit the practice and empower the Federal Trade Commission to pursue civil penalties against companies found using shrinkflation as an unfair or deceptive practice. President Biden expressed his full endorsement of the bill during his State of the Union speech.

As the debate surrounding shrinkflation continues, the Biden administration seeks to address the concerns of Americans grappling with higher prices. While critics argue that there may be unintended consequences to a ban on shrinkflation, the bill proposed by Senator Casey reflects the growing need for transparency and fairness in consumer pricing practices.