South Korea’s antitrust regulator announced on Friday that food manufacturers and suppliers will be obligated to inform consumers if they reduce the size of their products or risk facing fines of up to 10 million won ($7,300).
The Fair Trade Commission (FTC) stated that it considers the practice of certain businesses to decrease product sizes while maintaining the same price, known as shrinkflation, as an unfair trade practice subject to penalties.
Under the new rule, most processed food manufacturers and producers of household items such as toilet paper, shampoo, and detergents must display labels for three months if they downsize their products in a manner that results in a higher unit price. The regulation will come into effect in August after a three-month grace period, with first-time offenders facing fines of 5 million won and repeat offenders facing fines of 10 million won.
The FTC explained that the change aims to prevent situations where companies reduce the size or quantity of their products without adequate notice, leading consumers to unknowingly bear a significant price increase.
Shrinkflation has become a concern for consumers and governments worldwide as households struggle with declining purchasing power amidst rising inflation in recent years, despite some recent signs of relief in price pressures.
Rising food prices and living expenses were key issues in the lead-up to last month’s parliamentary elections, where President Yoon Suk Yeol’s ruling party suffered significant losses. Yoon’s government has implemented various measures to address price hikes, including reducing tariffs on food imports and pressuring companies to curb price increases.
