Shrinkflation trend forces law change on unit pricing

Shrinkflation has driven the government to strengthen the unit pricing code to help Aussies get accurate pricing in supermarkets and retail stores. 

The updated regulations will also introduce substantial penalties for stores that breach the code.

Shrinkflation is when product sizes decrease while prices remain the same or increase. It is mainly used to take advantage of consumers who are unaware of the not so obvious changes.

The move comes after the ACCC Interim Supermarket Inquiry Report, released by the Federal Government, found that nearly 90 per cent of consumers frequently use unit pricing to decide on their purchases.

Unit pricing allows shoppers to compare the cost of products based on weight, volume, or per unit, helping them avoid being misled by unchanged packaging that contains less product. (For example, 50 cents per 100gms and $1.02 per litre).

However, it also raised concerns regarding inconsistencies in how supermarkets apply unit pricing, including the readability of labels and the inconsistent use of units of measurement across stores.

Prime Minister Anthony Albanese emphasised the government’s commitment to consumer protection.

“Tackling shrinkflation through stronger unit pricing and new penalties is part of our plan to secure a better deal for Australians,” said Albanese. “We’re ensuring the ACCC is equipped to hold supermarkets accountable.”

He explained that strengthening the unit pricing code aims to improve the visibility of unit pricing in stores, standardise the use of measurement units, and extend its reach to cover a broader range of retailers. 

Assistant treasurer Stephen Jones added that consumers deserve fair prices, not “dodgy discounts”. 

“Misleading practices around pricing are illegal and completely inappropriate,” Jones said. “The bar needs to be raised significantly.” 

Meanwhile, consumer advocacy group Choice expressed support for the government’s initiative.

Andy Kelly, Choice deputy director of campaigns, said the initiative will close the loophole allowing supermarkets to evade penalties for poor unit pricing.

“We have been calling for changes to the grocery unit pricing code for years to make unit pricing easier for consumers to use, including making it more visible and ensuring it’s used consistently,” she continued. 

In March, the group found 10 products affected by shrinkflation – with Coles and Woolworths store-brand cereals shrinking in size by 65 grams while the price stayed the same, resulting in consumers paying 14 per cent more for the product.

“If consumers were notified of these changes, it would be harder for supermarkets to continue to get away with this sneaky tactic,” added Kelly. 

“Strong penalties for unit pricing will help the ACCC clamp down on supermarkets doing the wrong thing, but to make shrinkflation more transparent, we need labels on shelves alerting customers to when a product has shrunk, but the price has remained the same or increased.”

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