France orders retailers to display shrinkflation

PARIS (Reuters) - French retailers will have to notify shoppers when products have been reduced in size without a corresponding cut in prices in an effort to tackle so-called shrinkflation, the finance ministry said on Friday.

Shrinkflation has become a headache for consumers and governments alike as households have struggled to cope with dwindling purchasing power in the face of surging inflation in recent years.

From July, French retailers will have to display for two months when food and other common consumer goods products like detergent have been downsized in a way that causes the unit price to go up, the ministry said.

"Shrinkflation is a rip-off, we're putting an end to it. I want to rebuild consumers' confidence and confidence goes hand in hand with transparency," Finance Minister Bruno Le Maire said in a statement.

Food prices became a major political issue in France last year after food inflation hit a record 16% following annual price negotiations between suppliers and retailers.

In reaction, the government passed a law to bring forward negotiations for this year and put pressure on companies to limit price hikes.

Supermarket chain Carrefour voluntary slapped price warnings on some products last September to put pressure on big consumer goods producers like Nestle, PepsiCo and Unilever ahead of annual price negotiations.

(Reporting by Leigh Thomas; Editing by Mark Potter)