Amid the high inflation driven by a global pandemic and war, the South Korean government is actively discouraging businesses from raising prices. In response, enterprises have resorted to indirect tactics to safeguard profits, giving rise to various forms of sneaky inflation, such as skimpflation and shrinkflation. Shrinkflation, a pricing strategy wherein companies maintain prices but reduce product sizes, is currently under scrutiny, with the government labeling it a deceptive practice eroding consumer trust.
Deputy Prime Minister Choo Kyung-ho has announced stringent regulatory measures against shrinkflation, drawn after engaging in discussions with industries and consumer groups. The government plans to present detailed proposals in December, while a center to receive consumers’ reports on corporate downsizing of products has been operational since Nov. 23. Retailers must disclose shrinkflation products on their websites by early December.
Critics argue that the government’s emphasis on price stability may amount to excessive intervention. They say the consumers do not solely bear the impact of soaring prices as businesses grapple with escalating costs in raw materials, energy, labor, and transportation. Some view subtle price maneuvers, like shrinkflation, as a necessary response to the government’s insistence on unchanged prices, allowing businesses to maintain minimal profit margins.
Nevertheless, covert strategies like shrinkflation could backfire in the long term. Lee Jeong-hee, a professor of economics at Chung-Ang University, stated that while setting prices is within the purview of businesses, consumers have an equally important right to be informed. She added, “Consumers find it unpleasant when they notice a downsizing in regularly purchased products, which can impact consumer trust.”
Amelia Moon Staff Reporter
1. How have enterprises safeguarded their profits? What is shrinkflation?
2. What has the government done, according to paragraph 2?
3. What do critics argue, according to paragraph 3?
4. How can shrinkflation backfire in the long term?
1. Have you ever witnessed shrinkflation? Describe in detail.
2. What can the government do in response to shrinkflation?
3. Do you agree with the views of the critics? Explain.
4. What rights do consumers have? What can consumers do if their rights are violated?
Amid the high inflation driven by a global pandemic and war, the South Korean government is actively discouraging businesses from raising prices. In response, enterprises have resorted to indirect tactics to safeguard profits, giving rise to various forms of sneaky inflation, such as skimpflation and shrinkflation. Shrinkflation, a pricing strategy wherein companies maintain prices but reduce product sizes, is currently under scrutiny, with the government labeling it a deceptive practice eroding consumer trust.
Critics argue that the government’s emphasis on price stability may amount to excessive intervention. They say the consumers do not solely bear the impact of soaring prices as businesses grapple with escalating costs in raw materials, energy, labor, and transportation. Some view subtle price maneuvers, like shrinkflation, as a necessary response to the government’s insistence on unchanged prices, allowing businesses to maintain minimal profit margins.
