Retail Body Raises Concerns Over Ignoring Root Cause of Inflation in Crackdown on ‘Shrinkflation’
The Australian Retail Association (ARA) says that the government crackdown on “shrinkflation” is not addressing the underlying economic issues that have led to price increases.
On Oct. 3, Prime Minister Anthony Albanese announced plans to create stricter regulations for supermarkets to combat “shrinkflation” – the practice of reducing the weight or volume of a product while keeping or raising its price.
The proposed regulations aim to improve the clarity and consistency of unit pricing labels on products.
Unit pricing breaks down the price per volume or weight measure. While many stores already provide unit pricing comparisons, the government believes the system lacks consistency.
Albanese stated that penalties would be enforced to ensure supermarkets adhere to unit pricing rules and guarantee a fair deal for consumers.
ARA CEO Paul Zahra mentioned that the supermarket sector has been cooperative and involved in seven taxpayer-funded inquiries within the past year.
“There has been additional funding allocated to price-focused initiatives like the recent $1.1 million CHOICE supermarket research,” Zahra told The Epoch Times.
He added, “This approach regarding unit pricing seems to overlook broader economic issues that have a more significant impact on family budgets, such as interest rates, as we know that food and grocery shopping represent about 10 percent of a family’s weekly budget.”
Zahra suggested that the government should address the root causes of supermarket price increases, as they are a result of a series of economic challenges.
“Other industries like insurance and fuel have experienced much larger price increases than supermarkets, which have repercussions for the retail sector,” he explained.
According to Zahra, recent inquiries and reports on supermarkets showed that food and non-alcoholic beverage inflation was in line with overall inflation between March 2019 and June 2024.
As of the June 2024 quarter, the price increase in Australia for an equivalent basket of goods since March 2019 was lower (approximately 24 percent) compared to the OECD average (39 percent) and other sampled countries.
“Coles and Woolworths consistently make less than three or four cents profit per dollar – this information is publicly available,” Zahra stated.
Supermarkets Taking Action
A Woolworths spokesperson mentioned that package sizes are determined by individual manufacturers.
“Decisions about changes in packaging sizes for branded products are made by the supplier and are not common for Woolworths’ range of own-brand products,” the spokesperson explained.
They mentioned that Woolworths has taken steps to make shopping more affordable for consumers, as shoppers are price-savvy and look for cheaper options.
“We’ve introduced various measures to facilitate cheaper shopping, including the ‘best unit price’ filter on our website and app, which around 117,000 customers use weekly,” the spokesperson added.
They also noted that Woolworths is implementing electronic shelf labels and enhancing the visibility of unit pricing based on customer feedback.
