[Op-Ed] Shrinkflation: Not a Shortcut, but the Result of a Distorted Policy Environment

Prices are held down while costs keep rising, spreading shrinkflation that reduces product sizes / What must come first is an environment in which rising costs can be reflected in prices; consumers then choose based on price / Managing inflation by suppressing the market? Impossible; rather than blaming firms that reduce product sizes, the priority should be to establish sound policy

The controversy surrounding shrinkflation is intensifying again. Criticism continues that keeping prices unchanged while reducing a product’s volume or size deceives consumers. The government has responded by strengthening information disclosure and labeling requirements. However, an approach that defines this phenomenon solely as a matter of corporate morality misses the true cause of the problem.

Behind the spread of shrinkflation lies a strong price-suppression policy during a period of high inflation. Price hikes by food and restaurant businesses immediately become targets of social criticism. In practice, the timing and scale of such increases fall under government control. Prices are held down, but costs continue to rise.

In this environment, firms have few adjustment tools available. If they cannot raise prices, they have no choice but to find other ways to absorb costs. Adjusting product volume is one such method. Shrinkflation is not a trick; it is the result of a distorted policy environment.

The chicken franchise market shows this structure most clearly. The government introduced a pre-cooking weight labeling system for about 12,560 stores across the country’s top 10 chicken brands. It was the first system requiring weights to be displayed on menus and delivery apps. The stated purpose was to prevent shrinkflation.

Yet controversy continued even after the system was introduced. Pressure against price increases remained unchanged. Some companies chose to alter the parts used or adjust product composition. Weight labeling alone clearly has limits in eliminating firms’ incentives to make such adjustments.

The government’s response may instead create yet another distortion. Expanding per-unit price labeling and strengthening notification requirements are justified in the name of consumer protection. But when price signals are suppressed, only the form of adjustment changes. It may also appear in the form of lower quality or changes in raw materials.

The essence of shrinkflation is not a lack of information. The core issue is the distortion of price signals. Price is the market’s language for most directly conveying costs and demand. When that signal is blocked, the market responds in other ways.

The solution to consumer protection does not lie in policing firms. The more prices and weights are controlled, the more complicated the market becomes. What must come first is an environment in which firms can honestly reflect rising costs in prices. Consumers then choose based on those prices.

The lesson is clear. Inflation cannot be managed by suppressing the market. If we want to reduce shrinkflation, we should reexamine policy rather than blame firms. When price signals are restored, consumer protection also becomes possible.

Sumin Lee, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] 슈링크플레이션, 편법 아닌 왜곡된 정책 환경의 결과

Author: Su-min Lee

Date: 2026-04-08

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=28781