Supermarket giants should have to alert customers when a product falls victim to shrinkflation, an inquiry into the sector has recommended.
The Australian Competition and Consumer Commission (ACCC) found greater transparency is needed to curb the practice — where a product is downsized but sold at the same price and/or even higher.
The ACCC noted they were unable to precisely pinpoint how much shrinkflation was occurring in Austrailan supermarkets.
Despite this, the regulator said it was a major concern for the more than 21,4000 respondents to its consumer survey.
Many respondents to the ACCC survey said prices kept increasing but product sizes shrank. (Unsplash: Juliana Mayo)
“Shrinkflation is happening with every product. The packaging is being redesigned to look the same but if you look closer it’s actually smaller — so you get less — [but] you’re paying more to get less,” one customer told the ACCC.
“Shrinkage. Lots of products are getting smaller — smaller chocolates, less chips in a chip packet but the price remains the same,” another said.
“It is very clever deception!“
Supermarkets urged to include former and current prices
The ACCC recommendation would see supermarkets be forced to notify consumers when a product’s package size changes in an adverse manner.
The notification would have to include:
- Information about the previous and current unit prices
- Be published near the pricing ticket and online
- Be published for a set period to allow consumers to become aware of the change
It also detailed safeguards to ensure supermarkets were not able to dodge the crack down by claiming changes to packaging meant the product was new.
Coles had previously submitted to the ACCC that only a very small proportion of private label products were subject to shrinkflation.
The supermarket giant, alongside Aldi, said it was “open to exploring” industry-wide measures to improve transparency.
Woolworths, meanwhile, stated in public hearings there were fewer than 40 examples of shrinkflation out of about 6,000 private label products.
It told the ACCC it instead supported product manufacturers alerting customers of changes to product size.
It was an outcome the regulator opposed.
“While they may initiate the reduction in the product size, supermarkets are ultimately responsible for pricing and advertising of prices to consumers,” the ACCC report found.
“At most, suppliers could advise consumers of a product size or quantity change, but not whether or not there has been an increase or decrease in the (unit) price.”
In response to Thursday’s report, Woolworths said it would “welcome recommendations that improve transparency for customers where they don’t have unintended consequences or increase costs”.
Coles too welcomed recommendations that improve transparency while cautioning against “measures that will increase red tape and drive up costs”.
Woolworths had pushed for product manufacturers to inform customers of shrinkflation. (ABC News: Chris Gillette)
Consumer group welcomes recommendations
Consumer group Choice said the group was pleased to see shrinkflation addressed in the ACCC report.
“Last year, Choice identified 15 supermarket products that had reduced in size, with the price remaining the same or increasing,” senior campaigns and policy adviser Bea Sherwood said.
“Consumers deserve more information when shrinkflation occurs, and the recommendation to introduce shrinkflation notices will help everyone make better-informed decisions while shopping.”
In December, Choice documented five examples including Coles’ brand rocky road and salted caramel tarts which lost 60g and 30g in weight respectively, but saw the price increase by 50c.
For the rocky road variety, that meant consumers were paying 42 per cent more per 100g than they did in 2023.
At the time, Coles told Choice the price increase was due to rising production costs and high cocoa prices.
A Choice comparison of Coles brand tarts over the Christmas period. (Supplied: Choice)
Unit pricing overhaul alone won’t solve shrinkflation
The ACCC’s recommendations are also in light of recent plans to introduce penalties to supermarkets that breach the Unit Pricing Code.
The code requires grocery retailers to use unit pricing when selling packaged grocery items to help consumers identify the most cost-effective option.
Following the regulator’s August report, the Albanese government announced it would begin consultation to improve the code.
On Friday, Treasurer Jim Chalmers reiterated the plan, which includes improving comparability of prices between stores.
“We’re reforming the Unit Pricing Code which is all about that sneaky shrinkflation that drives people crazy,” he told the ABC.
During inquiry submissions, Aldi, Metcash and Woolworths had said changes in unit pricing was the main way they alerted customers to shrinkflation.
The ACCC argued this method required customers to be aware of the previous prices of the item in question, and said any reform was “likely to have limited effect on transparency around shrinkflation”.
Ms Sherwood agreed that unit pricing regulation alone would “not address the problem of shrinkflation”.
“Shrinkflation notices will be a useful tool to improve transparency and we’re pleased to see the ACCC has recommended this,”
she said.
