Chocolate pricing

Dairy Milk hit by contraction in inflation as Britons warn they will face ‘historic’ income shock

Dairy Milk has become the latest victim of ‘shrinkflation’ amid a dire warning from the Bank of England that Britons will suffer a ‘historic’ shock to their incomes.

Cadbury is to cut the size of its “family” bar by ten percent, with US parent company Mondelez blaming rising inflation on its chocolate production.

Despite the drop from 200g to 180g, the Dairy Milk ‘share’ bar will still be sold at £2 as part of efforts to offset rising production costs and maintain profitability – the latest example of a company passing on the impact of rising costs to customers.

It comes amid a cost of living crisis in the UK, with a number of confectionery companies downsizing their products as inflation soared to a 30-year high of 6.2 % last month.

And the Bank of England expects inflation to continue to rise to up to 8% this spring, citing the combined impact of the Covid economic recovery and the Russian invasion of Ukraine causing a “very sharp rise in energy prices”.

New figures released today also showed food inflation rose 5.3% year-on-year, with milk, fresh meat and coffee registering particularly strong increases.

The cost of groceries is also now 5.2% higher than it was this time last year, with more shoppers having to turn to cheaper products and private labels supermarkets – with customers also making fewer trips to save on gas costs.

The growing impact of ‘shrinkflation’ on Britain’s favorite foods

Dairy Milk has become the latest victim of ‘shrinkflation’ with the country’s favorite chocolate bar shrinking from 100g to 180g.

The impact of the contraction has already led to size reductions in Walkers multipacks, which now contain fewer bags of crisps, as well as boxes of washing powder and Tesco reducing the weight of its Mozzarella cheese.

The shrinkage has taken place in the UK over the past decade, with data from the Office for National Statistics showing that 206 products shrunk in size between September 2015 and June 2017.

This trend should continue this year in the context of the crisis in the cost of living.

Wispa Duo bars have been reduced by nearly 4g, or 7%, while still costing 85p in January.

Meanwhile, the 10-packs lost 18g in total and the 4-packs lost 8.4g.

In the United States, chip giant Frito-Lay revealed earlier this month that it had reduced the number of chips in its bags of Doritos, reducing the 9.75 ounce bags of the cheese snack to 9, 25 oz.

Cadbury’s large Crunchie and Creme Egg Easter eggs have lost weight by almost 10% in the last year – from 258g in 2019 to 233g and its Heroes egg by 7% from 254g to 236g.

Nutella was reduced from 400g to 350g last year, with no change in price.

Snickers, Maltesers, Toblerones and the much-loved Chocolate Orange have also shrunk in size over the past ten years.

The Cadbury bar’s size drop is the first in a decade, when in 2012 a 49g Dairy Milk bar shrank to 45g but remained at 59p.

Meanwhile, a year earlier, the 140g chocolate bar had been reduced to 120g.

A spokesperson for parent company Mondelez said: ‘We are facing the same challenges that so many other food companies have already reported in relation to the significant increase in production costs – whether ingredients, energy or packaging – and rising inflation.

“That means our products are much more expensive to manufacture.

“We understand that consumers are also facing increased costs, which is why we are looking to absorb costs wherever we can, but, in this difficult environment, we had to make the decision to slightly reduce the weight of our average Cadbury Dairy Milk bars for the first time since 2012, so we can keep them competitive and ensure the great taste and quality that our fans appreciate.

The impact of the contraction has already led to size reductions in Walkers multipacks, which now contain fewer bags of crisps, as well as boxes of washing powder and Tesco reducing the weight of its Mozzarella cheese.

The shrinkage has taken place in the UK over the past decade, with data from the Office for National Statistics showing that 206 products shrunk in size between September 2015 and June 2017.

This trend should continue this year in the context of the crisis in the cost of living.

Wispa Duo bars have been reduced by nearly 4g, or 7%, while still costing 85p in January.

Meanwhile, the 10-packs lost 18g in total and the 4-packs lost 8.4g.

In the United States, chip giant Frito-Lay revealed earlier this month that it had reduced the number of chips in its bags of Doritos, reducing the 9.75 ounce bags of the cheese snack to 9, 25 oz.

Cadbury’s large Crunchie and Creme Egg Easter eggs have lost weight by almost 10% in the last year – from 258g in 2019 to 233g and its Heroes egg by 7% from 254g to 236g.

Nutella was reduced from 400g to 350g last year, with no change in price.

Snickers, Maltesers, Toblerones and the much-loved Chocolate Orange have also shrunk in size over the past ten years.

The Bank of England said the inflation rate was expected to fall to around 2% in “two or three years”, but warned that commodity prices “could remain at a high level compared to the past”.

He said last week: ‘The inflation rate rose rapidly in 2021 and it has continued to rise this year. It is expected to reach around 8% this spring.

“We think it could go even higher later this year.”

He attributed the price rises to demand for post-Covid products, with businesses struggling to obtain a sufficient good that had to be imported from abroad.

Sales also fell in supermarkets, the dominant factor shifting shopping behavior from the pandemic to the growing impact of inflation, according to analytics firm Kantar.

The change saw households make 15.4 visits to the supermarket on average last month, compared to 15.6 trips in March 2021.

Fraser McKevitt, head of retail and consumer insights, said: “Increasingly, we are going to see consumers and retailers taking action to manage the rising cost of grocery baskets.

The OBR has pointed out that Britons are facing the biggest drop in real disposable income on record this year

The OBR has pointed out that Britons are facing the biggest drop in real disposable income on record this year

Concern over rising inflation could lead to further intervention by Chancellor Rishi Sunak (pictured) just days after announcing tax and duty cuts in his spring statement

Concern over rising inflation could lead to further intervention by Chancellor Rishi Sunak (pictured) just days after announcing tax and duty cuts in his spring statement

“Consumers are increasingly turning to own-brand products, which are generally less expensive than branded alternatives.

“Sales of own brands are down compared to the overall market, but the proportion of spending on these compared to brands has increased to 50.6%, compared to 49.9% in the same period l last year.

“Meanwhile, grocers are also adjusting their pricing strategies in response to the rising cost of goods.

Mr McKevitt added that rising fuel prices could also play a role in the decline.

“A trend we are already following is the move away from selling products at ‘round’ prices. The percentage of packs sold at £1, £2 or £3 has dropped significantly from 18.2% year last at 15.9% in March.

Analysts at EY Item Clubs, one of Britain’s leading economic forecasting groups, yesterday predicted that real incomes will fall this year as electricity and gas bills could hit £2,800 by October.

Economists say energy price cap will rise for typical household from around £690, or 54%, to £1,971 a year.

EY also estimates that inflation will only return to around 6% by the end of this year – but warned that “the potential for a further rise in energy prices in October means that the risks are at the rise”.

The Bank of England has backed the idea that a cap hike is likely to take place.

Concern over rising inflation could lead to further intervention by Chancellor Rishi Sunak just days after tax and duty cuts announced in his spring statement were dismissed as insufficient to help families who are trying to cope with soaring prices and utility bills.

Although Sunak trumpeted his tax-cut credentials in speech to MPs last week, fiscal watchdog the Office for Budget Responsibility said the statement reversed only a sixth of tax increases imposed since February 2020.

Britain’s tax burden is now on course to be the highest since Clement Attlee was prime minister after World War II.