Plants generally grow larger as they age, so it can be alarming when a cactus shrinks in size. Healthy cacti, with proper irrigation and no diseases, do not normally shrink very much in size. When a cactus does shrink, it is probably in the wrong growing conditions, not receiving enough water or suffering from a disease.
Cacti need enough water to prevent them from shriveling up and shrinking. They need more water during the summer than during winter, and it is fine to wait to water them until their soil feels very dry. Most of the time, they need a light amount of water every few weeks. Keep in mind that rainforest cacti, such as Christmas and Easter cacti plants, require more irrigation and higher humidity than most cacti.
If you leave your cactus outside, a drought could cause it to shrink without supplemental irrigation. Remember to adjust irrigation for outdoor cacti based on the amount of rainfall. Some species of cacti have roots that naturally shrink during droughts, and their shoots also retract into the soil somewhat during droughts. The amount of water a cactus needs depends partly on the type of soil in which it is planted. Very sandy soils allow water to drain out rapidly, and plants in sandy soils will need more irrigation to prevent shrinking than plants in heavier soils.
Coccid scales, also known as "soft scales," are tiny insects that feed on cacti and agave plants by sucking the juice out of them. Cacti with coccid scale infestations often shrivel up somewhat and may even die. The cactus longhorn beetle also feeds on cacti plants, causing damage and shrinkage along the edges of prickly pear pads. They also dig into cactus roots, causing the plant to collapse downward somewhat and shrink in size.
Most fungal diseases that shrink cacti will be easily visible as a type of rot on the surface of the plant. Root rot and pythium rot, however, often start to rot overwatered cacti from underneath the soil or inside the plants. Cacti with fungal diseases might shrink a little bit before the fungus becomes noticeable on the outside. Prevent these diseases by planting cacti in pots with drainage holes and watering cacti just enough to keep them from shrinking from too little water.