The Federal Government is taking its latest step in scrutinising Australia's supermarket and retail sector and announced plans to take decisive action against the practice of 'shrinkflation'.

The term 'shrinkflation' refers to the practice of reducing the size of a product while maintaining or increasing its price. The government plans to combat this by strengthening the Unit Pricing Code and introducing substantial penalties for supermarkets that breach it.

Unit pricing allows consumers to compare the prices of products by their volume, weight, or per unit. The ACCC Interim Supermarket Inquiry Report found almost 90% of consumers use unit pricing when deciding what products to buy. The government plans to improve the Unit Pricing Code by enhancing its readability and visibility in stores, addressing inconsistent use of units of measure, expanding the scope of retailers covered by the Code, and improving the use of unit pricing in cross-retailer price comparisons.

"Tackling 'shrinkflation' through stronger unit pricing and new penalties is part of our plan to get a better deal for Australians," said Prime Minister Anthony Albanese. "We are also making changes to make sure the ACCC is a tough cop on the beat, while also encouraging more competition and making sure there are significant consequences for supermarkets who do the wrong thing."

Assistant Treasurer Stephen Jones echoed these sentiments, stating, "Misleading practices around pricing are illegal and completely inappropriate. The bar needs to be raised significantly."

"Australian consumers deserve fair prices, not dodgy discounts. That's why we've empowered the ACCC to act in the interests of consumers and crackdown on dodgy practices immediately."

As reported by Mi3 last week, the Government has also provided the ACCC with a $30 million boost to crack down on market conduct that increases cost-of-living pressures. That's alongside consultation on a new mandatory Food and Grocery Code now underway, a ban on unfair contract terms, and increased penalties for breaches of competition and consumer law. The Federal Government has also commenced work with the states and territories to revitalise National Competition Policy.

"Competition is the consumer's friend. We're working to hold supermarkets to account by providing consumers with the information they need to make the best decisions," Assistant Minister for Competition Andrew Leigh said. "The Albanese Government is committed to helping Australian families save time and money at the checkout."

In addition, the government has supported CHOICE to release its second price monitoring report, providing Australians with data on where to get the cheapest groceries. This move is part of a broader effort to empower consumers and ensure fair pricing in the retail sector.