South Korea Cracks Down on ‘Shrinkflation’ with New Fines for Food Suppliers

South Korea’s Fair Trade Commission (FTC) has announced a new measure to combat ‘shrinkflation’—the practice of reducing the size of products while maintaining the same price. From August onwards, food manufacturers and household product suppliers in South Korea will face fines up to 10 million won ($7,300) if they fail to notify consumers about any reduction in product sizes that leads to an increase in the unit price.

Addressing Consumer Concerns with Transparency

Shrinkflation has become an increasing concern globally as consumers find themselves paying the same amount for less product. In response, the FTC’s new regulations will require that most processed food makers and manufacturers of items like toilet paper, shampoo, and detergents visibly label their products for three months if they downsize. This initiative is intended to enhance transparency and prevent consumers from unknowingly bearing higher costs due to reduced product quantities.

Regulatory Details and Penalties

The rule will be implemented following a three-month grace period, coming into full effect in August 2024. Violations of this mandate will result in a 5 million won fine for a first offense and double that amount for subsequent offenses. This decisive action aims to safeguard consumers from stealth price increases and ensure they are fully informed about the products they purchase.

Economic Context and Government Response

The introduction of these fines comes at a time when South Korea, like many countries worldwide, is grappling with the dual challenge of inflation and stagnant wage growth. Surging food prices and living costs were pivotal issues in last month’s parliamentary elections, which saw President Yoon Suk Yeol’s ruling party face significant setbacks. In response to these economic pressures, Yoon’s administration has taken several measures, including reducing tariffs on food imports and pressuring companies to curb price hikes.

Impact on Businesses and Consumers

While the new rules aim to protect consumers, they also impose additional regulatory burdens on businesses. Companies will need to adapt quickly to these changes, ensuring compliance to avoid penalties. The move by the FTC is expected to foster a greater level of trust between consumers and businesses by enhancing transparency in pricing and product quantity changes.

Conclusion

South Korea’s firm stance against shrinkflation reflects its commitment to consumer rights and economic transparency. By imposing fines and requiring clear labeling, the FTC is taking significant steps to ensure that consumers are not misled about the quantity and cost of the products they rely on every day. This policy not only addresses immediate economic challenges but also sets a precedent for other nations dealing with similar issues of market fairness and transparency.