Let use a case scenario to describe the term:
Have you ever noticed a reduction in the quantity of a product which you always buy without a corresponding increase in price? It's a clever way in which producers change,by way of increase, the per unit price of their products without explicitly hiking price in way that will deter the customers.
Example: I've been buying a brand of 80leaves exercise book known as "croc exercise book" for some time now because I noticed that even as the price of other 80leaves exercise books have increased in the market, the price of "croc exercise book" has remained unchanged. But little did I know that the number of leaves has been reduced from 80leaves to 70leaves until the day I was promoted to count them. I was deeply amazed and heartbroken. Worse still, the producers still print boldly "80leaves" on the "croc exercise book" which makes it difficult for their unsuspecting customers to take cognizance.
One bad thing about shrinkflation is that when a customer discovers this reduction in quantity of the given products; which the producers do in such a manner that it will only take a sensitive customer to notice, he/she will feel so disappointed and deceived that he/she will be forced to completely shift his/her demand which have a negative impact on the said product since it will lead to reduction in the total revenue as well as profit. But the positive side of shrinkflation is that as long as the consumers of the give product do no notice the reduction in the quantity of the said product, which in many cases they don't, the demand for such a product will continue to increase as against that of the close substitutes .
Shrinkflation is also known as "hidden inflation"