Shrinkflation and the Impact of Unit Pricing on Enhancing Price Transparency in Supermarkets

Purpose of research project *

Dr. Jun Yao, in collaboration with other academics (including Prof. Harmen Oppewal from Monash University and Dr. Di Wang from QUT), conducted projects and published several papers on leading academic journals (FT50 and A*) from 2016 to 2022 on how consumers respond to grocery prices, particularly focusing on the role of unit pricing and shrinkflation.

Shrinkflation is the practice of reducing the size or quantity of a grocery product while maintaining the same price. This strategy is commonly employed by manufacturers and retailers to cope with rising production costs or inflation without directly increasing prices, which might be more noticeable to consumers. Essentially, consumers pay the same amount for less product. Shrinkflation is perceived as deceptive to consumers and has been identified as an unethical practice that indirectly and covertly increases consumers' grocery spending.

Unit pricing is a pricing method that displays the price per standard unit of measure (e.g., per 100 g or per ounce) for a grocery product in addition to the product's retail price. Unit pricing has been found to effectively help consumers identify shrinkflation and mitigate its negative impacts.

Who has, is or will benefit *

We expect that this research will benefit society by effectively reducing consumers' grocery spending and protecting their financial well-being from price-increasing tactics such as shrinkflation. This is particularly important for disadvantaged and vulnerable consumer groups, such as low-income and low-education consumers, who often lack the ability to identify price changes and shrinkflation. 

Description of impact *

This research aligns with the UN Sustainable Development Goals: 1. No Poverty and 16. Peace, Justice and Strong Institutions. In September 2023, the UN secretary-General António Guterres remarked "A global cost-of-living crisis is affecting billions of people". Thus, our research contributes to the advancement of public policy on supermarket prices, aiming to improve price transparency in supermarkets.

Based on our research findings, we have made submissions to government bodies such as the Senate and ACCC. In February 2024, we made a submission to the Senate, in response to the inquiry into and report on the price setting practices and market power of major supermarkets. The submission was accepted and published (as Submission 83) by The Senate Select Committee on Supermarket Prices, advising The Committee has considered carefully all matters raised in our submission. In April 2024, we made a submission to the Australian Competition and Consumer Commission (ACCC), in response to the Competition and Consumer (Price Inquiry—Supermarkets) Direction 2024 given by the Treasurer. The submission was accepted and published by the ACCC. In both submissions, we provide detailed comments based on research published in recent years to strongly support the continuation and further strengthening of regulations on supermarket unit prices and their display. The submissions include recommendations to better display unit prices and mandate displaying historical prices within a specific time frame (e.g., one year), enabling consumers to make informed comparisons easily and protecting them from shrinkflation. This tracking of price changes could be implemented by the introduction of a central repository where retailers would submit the prices of key grocery items weekly. Our submission and the recommendations made to the ACCC have been acknowledged by the Consumer Federation of Australia. They also advised that the recommendations may be implemented after the completion of the ACCC’s supermarkets inquiry, which is due to submit its final report by 28 February 2025.

In addition, our research on shrinkflation has been widely reported on major media platforms such as The New York Times, The Conversation, SBS Radio, Forbes Advisor, The Lighthouse, and Yahoo News, among others. One of our key papers on shrinkflation has achieved an Altmetric Attention Score of 68, indicating significant impact both within the academic community and beyond on a global scale. This coverage has sparked public debate and increased awareness and understanding of shrinkflation among the general public. Ultimately, by raising awareness of shrinkflation and creating a more transparent pricing environment through regulation, consumers will benefit from reduced risks in decision-making and savings on food and grocery expenditures, leading to improved mental well-being and quality of life. It will also help create a more ethical and sustainable society.

Impact date	2019
Category of impact	Policy impacts, Society impacts
Impact level	Adoption (early)