How shrinkflation hides in plain sight

You pick up a chocolate bar, a packet of chips or a tub of yoghurt and pay roughly what you remember paying before. The familiar price offers reassurance. Yet the product may contain less than it once did.

Each gram costs more, even though the number on the shelf has stayed put. That is classic shrinkflation at work: paying more for less while the price tag appears unchanged. Australians know the phenomenon well. According to Finder, 16.1 million have noticed products getting smaller while the price stays the same.

When does a smaller packet cost more?

Shrinkflation is not just about you getting a smaller packet. It is about you paying more for the same amount of what is inside.

If a 100-gram chocolate bar costs $2 and a new 50-gram bar costs $1, the price per gram has not changed. You have just been offered a smaller portion. But if the bar shrinks and its price does not fall by the same proportion, each gram costs more. The shelf price might stay at $2, or it might fall by too little to make up for the missing chocolate. Both leave the shopper paying more for the same quantity than before.

This distinction matters because shrinkflation is sometimes described as “hidden inflation”. It may be hidden from many shoppers, but not necessarily from Australia’s inflation figures. The Australian Bureau of Statistics accounts for changes in pack size when measuring consumer prices. The shopper’s problem is that today’s wrapper tells you the bar’s current weight, but not what it weighed when you last bought it.

Who shrinks the bar, and who keeps it at $2?

Suppose a chocolate company sells its bar to a supermarket. The company decides how much chocolate goes in the wrapper. The supermarket decides the price on the shelf. If the company reduces the bar from 100 grams to 90 grams, it may save on ingredients or earn more on each bar it supplies. The supermarket can leave the shelf price at $2. It may also benefit if it pays less for each bar, although that depends on its agreement with the supplier.

For a supermarket’s own brand, the retailer has more direct control. It specifies the product it wants made and sets the price shoppers pay, even if a separate factory makes the bar. So, when we ask who benefits from a smaller product, we need to consider both the business that sets its size and the one that sets its shelf price. Sometimes they are different businesses; sometimes, in effect, they are the same.

But why keep the bar at $2? A familiar price may attract shoppers in a way $2.20 does not. If a seller expects to lose sales by breaching that point, reducing the quantity offers another way to raise the price per gram. The price is sticky not because changing a shelf label is difficult, but because businesses believe shoppers may react more negatively to a visible price increase than to a reduction in quantity.

That brings us to a tempting explanation. Perhaps businesses shrink packs only because their costs have risen. Costs certainly matter. But a seller’s desired margin and the competition it faces matter too. The ACCC’s supermarket inquiry found that Coles and Woolworths had maintained or increased product margins despite rising costs and identified limited incentives for them to compete vigorously on price. The inquiry makes an important point: rising costs alone do not determine how much businesses increase their effective prices.

Why are individual price changes hard to spot?

A regular shopper is unlikely to make the comparison. The $2 price is instantly recognisable. A change from 100 grams to 90 grams requires you to know, or remember, what the wrapper used to say. An Australian supermarket experiment found that shoppers responded more strongly to changes in price than to changes in pack size. It does not tell us what every shopper remembers, but it helps explain why a smaller pack can meet less resistance than a higher shelf price.

The effect builds a little at a time. A few missing grams may be difficult to notice in one weekly shop. Once the smaller pack replaces the old one, however, those grams remain missing on every subsequent trip. Another reduction sometime later adds to the cumulative difference. Someone returning after a long absence may see the result at once, while for a regular shopper who has watched it happen in increments, it may not resonate as loudly. But amid today’s cost-of-living pressures, the effect is harder to ignore: a household can spend the same amount on its weekly shop and still bring home less food.

What do the rules show shoppers?

Since 2009, many Australian grocery retailers have been required to display a unit price: the cost per 100 grams, per kilogram or per litre. A 100-gram chocolate bar priced at $2 would show a unit price of $2 per 100 grams. If the bar shrank to 90 grams while its shelf price stayed at $2, the unit price would rise to about $2.22 per 100 grams. That figure helps you compare its value with other bars on the shelf.

But it does not tell you that your usual bar used to weigh 100 grams. To discover that from the label alone, you would have to remember the old weight or the old unit price.

The ACCC identified this gap in March 2025 and recommended that supermarkets notify shoppers when a pack-size change leaves them worse off. Later that year, the government consulted on a possible size-change notice, as well as clearer unit-price displays, wider coverage of the existing rules and penalties for breaches. In its May 2026 response, the government said it was considering the consultation’s results.

Clearer unit prices and size-change notices would tell shoppers different things. A clearer unit-price label would help you compare the 90-gram bar with another bar on the shelf today. A notice saying “reduced from 100 grams to 90 grams” would let you compare your usual bar with the one you used to buy. The first helps you choose between products; the second tells you that a familiar product has changed.

That notice might influence the seller as well as the shopper. Research finds that people can judge a size reduction more harshly than an equivalent price rise when they discover it, partly because it feels concealed. If a reduction must be pointed out, the seller cannot count on it passing unnoticed. Disclosure may therefore discourage some quiet reductions, as well as help shoppers assess them.

What would count as success?

A smaller chocolate bar is not inherently a problem, and businesses are entitled to change products and prices. The key issue is whether shoppers can clearly see what has changed. With that information, consumers can decide whether to keep buying, switch to an alternative or go without.

There is, however, a complication. If businesses expect shoppers to reject clearly disclosed size reductions, they may seek higher returns elsewhere through offering smaller discounts, changing ingredients or reducing quality. Reductions in quality are often called “skimpflation”. Fewer shrinking packs would therefore not automatically mean better value. Assessing the reform would require looking at price, quantity and quality, comparing products both with their competitors today and with their own earlier versions.

Ultimately, the number on the shelf tells only part of the story. What matters is what that price buys. Amid cost-of-living pressures, the question is not simply whether a familiar product still costs the same. It is whether the same money buys as much as it once did.