Australia’s major supermarkets have come under scrutiny as the government investigates pricing practices. However, Woolworths and Coles argue that shrinkflation is driven by food manufacturers rather than retailers. The review, launched this week, is examining stricter rules for price labelling and unit pricing. There may also be penalties for packaging that misleads consumers by concealing size changes.
Shrinkflation has become more noticeable, with household items such as chocolate bars, chips and toilet paper quietly shrinking despite costs remaining unchanged. The government says these tactics frustrate customers and undermine trust. This has led to a review of the unit pricing code, which sets standards for how prices are presented in stores.
Retailers have voiced support for the initiative. They believe it is the responsibility of manufacturers to notify customers of any changes, especially in branded products they do not produce themselves. Woolworths and Coles say they are updating shelf labels to better reflect size changes, but argue transparency needs to begin with the product packaging.
Manufacturers, represented by the Australian Food and Grocery Council, claim they are managing rising costs and that shrinkflation is sometimes necessary to keep products on the shelves. Health rules, portion guidelines and economic pressures can affect sizing, but the outcome still leaves shoppers feeling shortchanged.
This push for reform is part of a broader effort to protect consumers as the government responds to public frustration during a prolonged cost-of-living crisis. Following a review by the Australian Competition and Consumer Commission, the federal government has allocated $30 million to strengthen oversight. It has also increased funding for consumer advocacy groups to develop tools that help shoppers understand pricing.
