Testimony Before the U.S. Senate Committee on Banking, Housing, and Urban Affairs

Allison Schrager testified in a hearing titled Higher Prices: How Shrinkflation and Technology are Hurting Consumers.

Watch the full testimony here.

Chairman Brown, Ranking Member Scott, members of the committee: thank you for the invitation to discuss with you today how price increases, shrinkflation, and technology may be harming consumers. I am a senior fellow at the Manhattan Institute, where I research fiscal and monetary policy and financial markets. I am also a columnist at Bloomberg Opinion.

The high inflation environment we are in is a terrible economic burden for American households—especially those living paycheck to paycheck, who are struggling to afford groceries, let alone enjoy the occasional meal out with their family. It has also proven more persistent than policymakers hoped. It is tempting to blame whoever raised the prices we see, the firms we buy goods and services from, who appear to be getting rich from our rising bills. But they are not at fault; they are merely reacting to the realities of the high and uncertain environment we are all facing.

Firms can increase prices several ways: they can simply increase the prices we all see—the sticker price, they can reduce volume of what we buy but still charge the same price—shrinkflation, or they can practice dynamic pricing—charging only some customers a higher price. All of these feel unfair to many consumers. But it is the high inflation environment that’s harming consumers, not how firms respond to it.

Click here to read the full testimony.

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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.