The chancellor has been urged to introduce measures to “shame” companies that are increasing the price of their products while decreasing their size at the upcoming Budget.
This phenomenon – known as ‘shrinkflation’ – has become pronounced during the ongoing cost of living crisis, with food prices remain high for many despite inflation recently slowing.
Supermarkets should be empowered to put labels on offending products, the Institute For Public Policy Research (IPPR) has said, forcing greater transparency on food prices.
It forms a suite of recommendations made by the think tank ahead of the fiscal event on 26 November. Its researchers have called on the chancellor to declare a “war on bills”, making the cost of living central to her economic agenda.
Other measures put forward include forcing smaller convenience supermarkets to stock cheaper non-brand items, and ensure the same deals are available in these locations as in larger stores.
Consumers have long been warned that smaller-size convenience supermarket chains could be charging massively marked-up prices for essentials. Analysis from Which? last year found that customers could be paying over £800 more across a year if they shop at these locations.
The IPPR also calls for energy bills to be cut by subsidising electricity costs, lowering the costs of solar, and looking at excess profits of energy network companies.
The think tank’s call to “shame” shrinkflation culprits echoes demands made in June by the Liberal Democrats, but not taken on by the government.
Last month, consumer group Which? found major brands are cutting back on the size of popular products as well as the quality, with some ingredients being downgraded for cheaper substitutes.
Among the examples was Aquafresh Complete Care Original Toothpaste, which increased in price from £1.30 for 100ml to £2 for 75ml at Tesco, Sainsbury’s and Ocado, a 105 per cent rise per 100ml.
In another case, Which? found KitKat Two-Finger Milk Chocolate Bar multipacks dropped from 21 bars to 18, while at Ocado the price also rose from £3.60 to £5.50, a jump of 53 per cent.
The interventions recommended by the IPPR would not be significantly costly, its researchers argue, but would be impactful in delivering the government’s mission of improving the cost of living.
For millions across the UK, managing the cost of essentials remains a daily struggle as prices continue to rise faster than household incomes. Inflationary pressures have caused food prices to rise by 35 per cent since 2019, while energy costs have risen by 50 per cent since 2021.
Recent research by the Resolution Foundation found living standards have stagnated over the past 20 years, as the average income has increased by just 7.6 per cent since 2006. Over the same period, food prices have risen by 70 per cent, and energy costs by a massive 119 per cent.
Sam Alvis, IPPR associate director for the environment and energy security, said: “The cost of living is still the public’s number one concern. A government that declares a ‘war on bills’ – and means it – can show it’s fighting on the side of working people. Small but visible actions, repeated over time, are the best way to prove that government can make life fairer and more affordable.”
In recent weeks, ministers have hinted that the government may scrap or tweak the two-child benefit cap, which campaigners say keeps over 600,000 in poverty. On Tuesday, Ms Reeves said “a child should not be penalised because their parents don’t have very much money,” signalling that the measure may be changed in the Budget.
A number of tax rises are also expect as part of the fiscal event, with measures understood to be under consideration ranging from overhauling the council tax system, to a simple increase to the headline rate of income tax (despite manifesto commitments).
A Treasury spokesperson said: “We do not comment on speculation around future changes to tax policy outside of fiscal events.
“The Budget later this month will build stronger foundations to secure Britain’s future and focus on the priorities of working people: cutting waiting lists, cutting the national debt and cutting the cost of living.”
