Why Shrinkflation Is Turning Into Specflation in the UK
Companies in the UK are no longer just shrinking products to maintain profits — they are now using innovation claims to keep prices high. Economists call this the rise of specflation.
Shrinkflation — the quiet reduction in product size without lowering price — has become a familiar story in the UK. But a new phenomenon is emerging: specflation. This refers to companies increasing prices by marketing minor product changes as innovations or upgrades. It is becoming one of the hidden drivers behind stubborn inflation in 2025.
What Is Specflation
Specflation combines “specification” and “inflation.” It describes price increases that are justified by supposed product improvements that have little measurable value. Instead of shrinking packages, brands keep the size the same but claim better ingredients, formulas, or packaging — often to maintain margins.
A 2025 report from the Office for National Statistics (ONS) found that product substitution and “premium repositioning” contributed up to 0.4 percentage points to headline inflation.
Source: ONS – Consumer Price Index Technical Review 2025
Examples of Specflation in Action
- Food and Drink – Supermarket products rebranded as “artisan,” “high protein,” or “eco-sourced” often carry 10–15 percent price premiums despite near-identical ingredients.
- Household Goods – Cleaning products marketed as “new concentrated formulas” now sell in smaller bottles at equal or higher prices.
- Personal Care – Shampoo and skincare lines regularly relaunch with minimal formulation changes but higher pricing.
Price comparison data from Tesco and Asda shows that average unit prices for everyday branded items have risen 12 percent in 2025, even after adjusting for packaging size.
Source: Tesco Price Data – Public Comparison 2025
Why Companies Are Doing It
High inflation over 2022–2024 squeezed margins. With consumers now sensitive to obvious shrinkflation, businesses have turned to brand repositioning and marketing language to preserve profitability.
According to the Bank of England, profit margins in consumer goods sectors rose 1.6 percent in 2025 despite flat volume sales, suggesting price changes rather than demand recovery.
Source: Bank of England – Monetary Policy Report May 2025
How It Affects Real Inflation
Traditional inflation measures like the CPI struggle to capture specflation because official price data doesn’t track qualitative product changes. When a product is “replaced” with a “new version,” it is often treated statistically as a new item — resetting its price baseline.
Economists at the Resolution Foundation argue that this underestimates real consumer inflation by up to 1 percent annually.
Source: Resolution Foundation – The Hidden Cost of Quality Inflation 2025
Consumer Awareness and Regulation
The Competition and Markets Authority (CMA) has opened investigations into misleading claims about “new formulations” and “eco packaging” after finding that some products were chemically identical to their predecessors.
Source: CMA – Consumer Goods Pricing Inquiry 2025
The Bigger Picture
Specflation highlights the blurred line between marketing and inflation. It shifts focus from raw material costs to psychological pricing — companies betting that consumers value perception over precision.
If left unchecked, specflation could keep inflation rates elevated even as supply chains normalise, distorting both data and household budgets.
The Bottom Line
Shrinkflation may have started the trend, but specflation is making it harder to see the true cost of living. By inflating value through language rather than quality, companies are quietly reshaping how inflation behaves — and how consumers experience it.
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