As shrinkflation and other unfair pricing practices draw public ire, experts say deeper problems are to blame.
Claims of "shrinkflation" and other covert retail tactics that pass costs on to consumers are drawing increased attention as Australians continue to struggle with high living costs. But with inflation squeezing both retailers and shoppers, the causes of big price rises, falling value for money and unfair pricing practices are complex.
In particular, shrinkflation – where retailers reduce the size of products without lowering prices – has gained notoriety amid increased public scrutiny of Australia's supermarket sector. The Albanese government recently announced a strengthening of the Unit Pricing Code in an explicit bid to curtail what it called this "increasingly common" practice.
However, opinions on such tactics, their prevalence, and how shoppers can respond, differ. Professor Nitika Garg in the School of Marketing at UNSW Business School points to a lack of competition, including in the Australian supermarket "near-duopoly" of Coles and Woolworths, as a leading source of the problem.
Prof. Garg says shrinkflation and other covert tactics are growing issues and consumers need to shop around to find better value – meaning they will inevitably pay more, either in time or higher prices.
"Imagine a young family with young kids and without huge amounts of discretionary income – how much time do they have to sit on websites and apps and price-compare?" she says.
"It is a heavy burden to place on individual consumers."
In contrast, Associate Professor Mark Humphery-Jenner in the School of Banking & Finance at UNSW Business School cautions against overreacting to claims about unfair pricing tactics, which he says can be overblown.
Generally, retailers already face thin profit margins, so higher prices are an inevitable result of high inflation, not a case of price-gouging, he says.
"The concern is that when customers are price-sensitive – or demand elastic – retailers cannot maintain profits without losing customers [and] we are not even talking about increasing profits," A/Prof. Humphery-Jenner says.
"Operating at breakeven can be challenging when your own input costs go up and you cannot pass this on to customers."
He says supermarkets generally keep only a few cents of profit for every dollar spent. Notably, Woolworths Group recently saw its share price drop after warning that despite a 4.5% increase in group sales in the first quarter of 2025, it expects lower first-half earnings for its Australian Food business as value-conscious shoppers continue to seek out specials and savings, leading to a "lower-margin sales mix".
Prof. Garg and A/Prof. Humphery-Jenner agree that retailers' use of dubious pricing practices has a strong psychological impact on consumers, who are increasingly sensitive to perceived unfairness around costs amid an inflation-fuelled cost-of-living crisis.
The Australian Bureau of Statistics (ABS) reported rising costs across all household types in its
