Why We Spent More On Halloween Candy

Yesterday, trick or treaters got a smaller Milky Way fun size bar:

During December 2021, the bars shrunk. But I assume they did not reduce the price.

Halloween Candy

In addition to smaller candy bars, trick or treating children might have received lower quality candy. Up a whopping 21.6 percent since Halloween in 2021, candy prices have soared. Because candy price hikes exceed general grocery inflation, some shoppers bought the sometimes inferior but always cheaper house brands.

Candy prices, shown in red, are up more than food at home:

With cocoa boosting chocolate prices, Axios tells us that some buyers found marshmallow more attractive:

Whether it’s chocolate, marshmallow or whatever we want to give away and eat ourselves, we will spend a lot on Halloween candy. While as a nation, the National Retail Federation projects candy spending at #3, behind costumes and decorations, still we are talking about $3.6 billion:

More meaningfully perhaps, they expect each of us to spend close to $32.00 on candy for the Halloween holiday. At the same time, combined, candy, costumes, decorations, and cards could have cost you and me an estimated $108.24.

Our Bottom Line: Inelastic Demand

When price is up, we can think of the law of demand where higher prices typically create the incentive to purchase a smaller quantity. Reducing our purchases in different ways, some of us spend less and buy less while others spend the same amount of money but buy less candy.

Below though, you can see that, for most of us, the higher prices had no impact. An economist would say that we are displaying inelastic demand. Unlike an elastic rubber band that expands and contracts when prices change, Halloween candy spending minimally responds to a price change:

Returning to where we began, shrinkflation reminds us that producers also have rising costs.

My sources and more: Thanks to my Axios email for inspiring today’s Halloween candy post. From there, the perfect complement was the National Retail Federation and Barrons and this econlife post on shrinkflation. In addition, the Mouseprint website had examples of downsizing.