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Korean consumers push back against ‘greedflation’ and shrinking products

Published: 11 Apr. 2025, 00:02 Updated: 13 Apr. 2025, 21:40

Moon Eun-sook

The author is chairperson of the Committee on Consumer Policy, ISO.

As inflation pressures persist and consumer sentiment weakens, Korean businesses are facing renewed criticism over pricing strategies that appear to take advantage of economic uncertainty. A growing number of consumers and experts are calling out what they see as opportunistic price hikes, deceptive marketing and shrinking product sizes — practices grouped under terms like “greedflation,” “skimpflation” and “shrinkflation.”

Cheese are displayed at a supermarket in Seoul. Cheese was among the 37 products studied by Korea Consumer Agency in 2023, that reduced the quantity or size of a product without price adjustments. [NEWS1]

Greedflation, a blend of “greed” and “inflation,” refers to corporate price increases that go beyond what rising costs can justify. Though companies have long defended price hikes as necessary due to global supply chain disruptions or currency fluctuations, critics point to a lack of price reductions even after raw material costs fall.

Nowhere is this more evident than in the food industry. Over the past year, several major food producers in Korea have raised prices on snacks, instant noodles and ice cream during high-demand periods, such as the end-of-year holidays. Yet, when ingredient prices declined, those increases remained. Some essential items have jumped by more than 10 percent, while others have surged by 20 to 30 percent. Dining out has also grown more expensive.

This comes at a time when household income is barely keeping pace with inflation. The minimum wage rose just 1.7 percent this year, while inflation is expected to reach 1.9 percent. The squeeze is particularly hard on low-income and vulnerable households, who now face greater difficulty affording everyday goods. Economists warn that this imbalance could lead to reduced consumer spending and a broader economic slowdown.

Some companies have also turned to skimpflation, a practice where product quality is reduced, while prices remain the same or increase. In one common example, companies advertise the use of domestic or premium ingredients but switch to cheaper imports without notifying consumers. While the label stays the same, the product inside often does not.

Shrinkflation, meanwhile, is even harder to detect. This tactic involves quietly reducing the size or weight of a product without changing its price. Consumers may not notice that a bag of snacks or a tub of ice cream contains less than before — until they feel they’re getting less value for money. In 2023, backlash erupted after several Korean food companies reduced product sizes while maintaining the same price point.

In addition to these product-related tactics, marketing practices have also drawn scrutiny. Influencer advertising that blurs the line between personal endorsement and paid promotion — often called “stealth marketing” — has become increasingly common. Some influencers present gifted items or paid partnerships as personal purchases, misleading followers and exploiting consumer trust.

Promotional strategies like “buy one, get one free” deals are also being questioned. While they create the impression of a bargain, they are sometimes paired with increased base prices, meaning the net benefit to consumers is minimal. These tactics are seen as undermining transparent pricing and manipulating consumer behavior.

The financial sector has come under similar criticism. Banks and lenders are often quick to raise interest rates on loans when the central bank adjusts rates upward, but slow to increase deposit rates for savers. When rates decline, the pattern reverses — loan rates stay high while deposit rates fall. This allows financial institutions to widen profit margins at the expense of customers.

A pedestrian walks past automated teller machines, or ATMs, of Korea's major banks in Seoul. [NEWS1]

Consumers’ rights to request lower loan rates are often overlooked. Even when civic groups uncover unfair practices, affected borrowers rarely receive meaningful compensation.

Critics have drawn comparisons to the 1997 Asian financial crisis, when many banks unilaterally changed fixed-rate loans to variable rates, plunging families into financial distress.

In response to mounting concerns, the government introduced a regulation in May 2023 aimed at curbing unfair commercial practices. The Fair Trade Commission has since begun investigating companies for deceptive behavior, but long-term solutions remain elusive.

Korean consumers have fought and won such battles before. In 1988, a landmark court case ruled against deceptive “fake sales” at department stores, marking a turning point for consumer protection in the country. Today, the struggle continues — this time against more subtle and sophisticated corporate strategies.

During times of national crisis, consumers in Korea have consistently shown a willingness to share burdens and support domestic companies. But many now say that goodwill is being tested by corporate greed. Experts argue that businesses must adopt more transparent pricing and honest marketing, not only to restore trust but to ensure sustainable, long-term growth.

A truly resilient economy, they say, is built on fairness and accountability — not short-term profits at the consumer’s expense.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.