Shrinkflation is a global issue | WARC | The Feed
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Shrinkflation is a global issue
Political leaders in France and the US have been publicly critical of companies for making products smaller while maintaining the existing price, but South Korea’s government is one of the first to legislate against it.
What’s happening
- The Korea Fair Trade Commission has said implementing such shrinkflation measures while not informing consumers constitutes an “unfair transaction” as consumers are forced to bear indirect price increases.
- It will now require producers that downsize products to put notices on packages, websites, or at stores for the three months following the change, Reuters reports. Failure to do so will incur fines.
Inflation concerns persist
- Inflation has come down from the heights of 2022 and 2023 but it continues to be a problem in many countries.
- In a recent Gallup poll, 41% of Americans cited cost of living and inflation as their top financial concern – far ahead of things like the cost of owning/renting a home (14%) or having enough money to service their debts (8%).
- In the UK, an analysis by the Financial Times found that consumers spent 15% more over the past two years while buying 0.5% fewer goods; food volumes were down 8% even as grocery spending rose 16%.
Why shrinkflation matters
From the French Revolution to the Arab Spring, high food prices are a trigger for social unrest. Only last month, South Korean President Yoon Suk Yeol announced food subsidies and cut tariffs on food imports as high prices and living costs resulted in his party suffering defeat in parliamentary elections.
Food and household goods brands, already having to tread carefully around the “woke” debate, may come under more pressure from politicians with one eye on their approval ratings.
Sourced from Reuters, Financial Times, Gallup
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