The fix is easy, go to:
UE4: Window > Developer Tools > Widget Reflector and set “Application Scale” to 0.7
UE5: Tools > Debug > Widget Reflector > Set Application Scale to 0.7
Troubleshooting: If after setting App Scale to 0.7 dropdown menus happens to be TOO small, just set App Scale to 1 and 0.7 again.
Note: I installed AUR (en) - unreal-engine-bin, this problem was appearing on UE4.2x builds too. (I wasn’t using UE earlier so don’t have any idea for 4.1x)