South Korea's FTC to Penalize Shrinkflation

South Korea's Fair Trade Commission (FTC) announced on Friday that food makers and suppliers will now be required to inform consumers if they reduce the size of their products, or face fines of up to 10 million won (US$7,300). The FTC designated the practice of reducing product portions while maintaining the same price, known as shrinkflation, as an unfair transaction subject to penalties. Processed food makers and manufacturers of household supplies like toilet paper, shampoo, and detergents will need to display labels for three months if they downsize their products in a way that increases the unit price.

This new rule will come into effect in August after a three-month grace period, and violators will face fines of 5 million won for the first offense and 10 million won for subsequent offenses. The FTC stated that the change aims to prevent companies from reducing the size, standard, weight, or quantity of their products without sufficient notice, resulting in consumers unknowingly bearing significant price increases.

Shrinkflation has been a concern for consumers and governments globally, as households contend with reduced purchasing power amidst rising inflation.