2023-11-06 09:35:32
The Ministry of Oceans and Fisheries announced on the 6th that it would launch a price stabilization response team to intensively manage seafood prices. A consumer is selecting seaweed products at a large supermarket in Seoul. / Yonhap News As the government suppresses food price increases to stabilize prices, there are increasing cases of companies reducing product capacity while maintaining prices. It is pointed out that the government’s artificial price suppression is encouraging so-called ‘shrinkflation’. The government announced that it would urge the industry not only to increase product prices but also to refrain from shrinkflation.
According to the food industry on the 6th, CJ CheilJedang has been supplying the frozen convenience food ‘Charcoal Scented Barbecue Bar’ to convenience stores since the beginning of this month, reducing the weight from 280g to 230g. The price is the same at 5,600 won per bag, but the price per gram increased by 21% from 20 won to 24.3 won.
Since last month, Dongwon F&B has also maintained the price of its representative product, Yangban seaweed, at 700 won per bag, while reducing the weight by 0.5g from 5g to 4.5g and delivering it to retailers. Last June, the company kept the price of ‘Dongwon Tuna Light Standard’ (3,300 won per can) the same and lowered the weight from 100g to 90g. KFC has been selling butter for 300 won since the end of last month, which was previously provided free with the purchase of biscuits. OB Beer reduced the capacity of each Cass bundle product from 375mL to 370mL in April.
Shrinkflation is also a marketing tactic that tricks price-sensitive consumers into thinking that product prices remain the same. Recently, it has been pointed out that this phenomenon is worsening as the government suppresses product price increases to control inflation. As the Ministry of Agriculture, Food and Rural Affairs introduced a ‘dedicated management system’ that appoints public officials to manage seven items, including ramen, bread, snacks, coffee, ice cream, milk, and sugar, shrinkflation has become more severe among companies that are watching the government. There are speculations that it will continue to ramp up.
In the food industry, even though the prices of various raw materials such as alcohol, barley, flour, and sugar are soaring, reducing product weight is an inevitable choice in a situation where product prices cannot be raised arbitrarily due to the government’s attention.
Government “We will also prevent shrinkflation”… Expert: “Prices will skyrocket later.”
It is pointed out that shrinkflation is occurring as a kind of ‘balloon effect’ as product price increases are suppressed.
The government also accepts, to some extent, that there are factors causing price increases. However, it is viewed as a kind of ‘trick’ to deceive consumers by raising the price of the product more than the increase in raw materials or reducing the capacity and substantially increasing the price per gram.
Accordingly, the Ministry of Agriculture, Food and Rural Affairs, the government responsible for food, and the Ministry of Strategy and Finance, the government responsible for prices, are strengthening monitoring of shrinkflation. A senior government official said on the 6th, “We are closely monitoring not only the price increase of products in the food industry, but also shrinkflation,” and added, “We will refrain from passing the price burden to consumers by selling in reduced quantities through industry meetings.” “I plan to make a request,” he said.
On this day, the Ministry of Strategy and Finance established the Price Stability Field Response Team to respond to the rise in living prices. Ministry of Strategy and Finance office and director-level executives have been visiting the site since this day to check the supply and demand status. Deputy Minister Hong Du-seon visited a cabbage farm in Haenam-gun, Jeollanam-do and a green onion farm in Jindo-gun to inspect the crops. Lee Ji-ho, Director of People’s Livelihood Economic Policy, visited an egg market in Asan, South Chungcheong Province and looked at egg prices and the supply and demand situation.
The Ministry of Strategy and Finance plans to hold regular price-related vice ministerial meetings starting this week in conjunction with price-related ministries, including the Ministry of Agriculture, Food and Rural Affairs. The Ministry of Oceans and Fisheries also formed a price stability response team with Vice Minister Park Seong-hoon as the price stability policy officer. We plan to strengthen price management for seven items, including pollack, mackerel, squid, cutlassfish, dried anchovies, other highly consumed fish, and sea salt.
It is pointed out that the government’s method of individually controlling the prices of individual items has limitations. Seok Byeong-hoon, a professor of economics at Ewha Womans University, said, “It is nothing more than an optical illusion for the government to pressure companies to push down prices,” and added, “If prices are suppressed for short-term results even though there are clear factors for increase, such as rising raw material prices, prices may skyrocket later. “He said.
▶ Shrinkflation
shrinkflation. A compound word of ‘shrink’, meaning decrease, and ‘inflation’, meaning rise in prices. Instead of maintaining product prices, they indirectly increase prices by reducing size and capacity or lowering quality. This is a phrase coined by British economist Pippa Malmgren in 2015.
Reporter Kang Kyung-min/Park Sang-yong [email protected]
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