Four pound sugar bags have been an option for at least four years. I first encountered them in Stop & Shop, the company that brought you Peapod. At times, they were lower per pound so I’d buy them.
People aren’t stupid. We do notice size changes. It is frustrating, but you have to be a relatively monied, inattentive shopper not to notice 16 oz cans becoming 14, and so forth. Cranberry sauce. Tuna. I’ve even noticed smaller kielbasa for the same price as a pound. At least sugar had 4 lbs as an option, with 5 lbs remaining standard. That may have been an early instance of trying to give people on a tight budget a smaller size at an easier to take price, though there have always been one pound sugars for that.
Size changes aren’t new. It’s been happening with candy bars since I was a kid, decades ago.
Another size reduction? Potatoes in 4 lb bags. Not universal, but they exist, and are marketed at what would be a decent or sale price for five pounds, making it easy to be fooled into grabbing a bag, thinking it’s a deal. Very important to pay attention to those unit prices.