This Country Will Police ‘Shrinkflation’ at the Supermarket - Kanebridge News
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This Country Will Police ‘Shrinkflation’ at the Supermarket

South Korea will soon require companies that slim down products to show the old and new sizes on packaging

By TIMOTHY W. MARTIN
Wed, Dec 27, 2023 7:30amGrey Clock 3 min

SEOUL—Food prices have risen so much that Kim Soo-yeon has developed a suspicious new habit at the grocery store. She has taken to shaking bags of her favourite brands of potato chips to see if they feel lighter.

“If companies are reducing the amount of food by unnoticeable amounts, it feels deceptive,” said the 32-year-old office worker in Seoul.

South Korean authorities will soon be backing her up in the supermarket aisles.

Seeking to temper the effects of inflation, many countries have sought to use political pressure to dissuade food makers from gouging consumers—with higher prices or lower volumes. South Korea is taking things a step further.

Starting next year, the country will require companies to disclose on their packages and websites when grocery items drop in volume, but not price. To ensure firms comply, South Korea is establishing a dedicated price-investigation team to monitor any fluctuations. Officials are considering levying fines, too.

South Korea’s muscular response to “shrinkflation” reflects how a sluggish economy—its projected full-year growth of 1.4% is roughly half that of other wealthy countries—has become a major problem for President Yoon Suk Yeol, whose approval ratings remain stuck in the mid-30s. Those unhappy with Yoon most commonly cite economic issues.

The new proposals to fight shrinkflation came as the government unveiled an initial list of violators. Following a monthlong investigation, authorities said the offerings of everything from beer to Vienna sausages to dumplings had quietly gotten smaller. Some 16 variants of flavored almonds had shrunk, too.

Choi Si-yeon, a 28-year-old office worker, said she was angry when she found out about what had happened with her favourite wasabi-flavoured almonds. Each bag contained 20 grams less, a seemingly undetectable amount.

“If they had raised the price, at least some consumers would notice,” Choi said.

The maker of the snack, a South Korean firm called HBAF, for Healthy But Awesome Flavors, said it had disclosed the product-size changes on its website. The firm pointed to the pandemic, a rise in labor costs and almond prices as factors.

Other companies also claimed to have made online disclosures or argued the slimmed-down offerings were part of flavour revamps.

Shrinkflation backlash has emerged elsewhere, too. France’s second-largest supermarket chain, Carrefour, has put up bright orange signs to highlight products it deems subject to shrinkflation since September. In the U.S., Sen. Bob Casey (D., Pa.) recently issued a report on shrinkflation, citing facial tissues and Oreos as examples.

With costs rising, what is often lacking is transparency over potential changes, creating room for a sense of injustice when shrinkflation occurs, said Rajiv Biswas, chief economist for the Asia-Pacific region at S&P Global Market Intelligence. “Consumers can’t check the website of hundreds of products,” he said.

Headline inflation in South Korea topped out at 6.3% in July 2022 from the prior year, below the recent peaks of 9.1% in the U.S. and 11.1% in the U.K. But food prices in the East Asian country had remained relatively low for decades, so the recent upticks have triggered outsize anger. Wages haven’t kept pace with rising prices. The country’s housing market—the main source of wealth for many South Koreans—has stagnated.

A majority of South Koreans plan to spend less money next year, according to a recent poll, with nearly half of respondents citing inflation as the chief reason.

Low inflation had been a particular policy priority for South Korea over the decades, helping the country’s export-heavy economy maintain a good environment for private investment, said Randall Jones, a former senior official at the Organization for Economic Cooperation and Development who led the group’s economic reports on South Korea.

“People aren’t used to inflation in South Korea,” said Jones, who is now a distinguished fellow at the Korea Economic Institute of America, a think tank based in Washington, D.C.

South Korea is conducting daily price checks for more than two dozen staple items such as milk and ramen noodles. The country’s antitrust regulator will list any shrinkflation examples on a newly created website and will handle enforcement of the new measures. The government wants to ink agreements with large South Korean retailers to build a joint monitoring system for some 10,000 everyday items.

That sliced cheese and other inexpensive items were among the first named shrinkflation violators irks people like Lee Hyun-woo, a 23-year-old university student. “If even processed food is shrinking, I feel betrayed,” Lee said.

In recent weeks, the country’s shrinkflation suspicions have touched everything from the cubed white radish accompanying Korean fried chicken to the cream density of a slice of strawberry cake.

Kim Young-hee, a 42-year-old homemaker, is glad about more government transparency. But the extra knowledge likely won’t change her habits, such as her occasional purchase of honey-butter almonds for her children.

“I’ll still buy the almonds,” Kim said, “but I don’t want to be tricked.”



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These stocks are getting hit for a reason. Instead, focus on stocks that show ‘relative strength.’ Here’s how.

By KEN SHREVE
Wed, Jun 12, 2024 4 min

A lot of investors get stock-picking wrong before they even get started: Instead of targeting the top-performing stocks in the market, they focus on the laggards—widely known companies that look as if they are on sale after a period of stock-price weakness.

But these weak performers usually are going down for good reasons, such as for deteriorating sales and earnings, market-share losses or mutual-fund managers who are unwinding positions.

Decades of Investor’s Business Daily research shows these aren’t the stocks that tend to become stock-market leaders. The stocks that reward investors with handsome gains for months or years are more often  already  the strongest price performers, usually because of outstanding earnings and sales growth and increasing fund ownership.

Of course, many investors already chase performance and pour money into winning stocks. So how can a discerning investor find the winning stocks that have more room to run?

Enter “relative strength”—the notion that strength begets more strength. Relative strength measures stocks’ recent performance relative to the overall market. Investing in stocks with high relative strength means going with the winners, rather than picking stocks in hopes of a rebound. Why bet on a last-place team when you can wager on the leader?

One of the easiest ways to identify the strongest price performers is with IBD’s Relative Strength Rating. Ranked on a scale of 1-99, a stock with an RS rating of 99 has outperformed 99% of all stocks based on 12-month price performance.

How to use the metric

To capitalise on relative strength, an investor’s search should be focused on stocks with RS ratings of at least 80.

But beware: While the goal is to buy stocks that are performing better than the overall market, stocks with the highest RS ratings aren’t  always  the best to buy. No doubt, some stocks extend rallies for years. But others will be too far into their price run-up and ready to start a longer-term price decline.

Thus, there is a limit to chasing performance. To avoid this pitfall, investors should focus on stocks that have strong relative strength but have seen a moderate price decline and are just coming out of weeks or months of trading within a limited range. This range will vary by stock, but IBD research shows that most good trading patterns can show declines of up to one-third.

Here, a relative strength line on a chart may be helpful for confirming an RS rating’s buy signal. Offered on some stock-charting tools, including IBD’s, the line is a way to visualise relative strength by comparing a stock’s price performance relative to the movement of the S&P 500 or other benchmark.

When the line is sloping upward, it means the stock is outperforming the benchmark. When it is sloping downward, the stock is lagging behind the benchmark. One reason the RS line is helpful is that the line can rise even when a stock price is falling, meaning its value is falling at a slower pace than the benchmark.

A case study

The value of relative strength could be seen in Google parent Alphabet in January 2020, when its RS rating was 89 before it started a 10-month run when the stock rose 64%. Meta Platforms ’ RS rating was 96 before the Facebook parent hit new highs in March 2023 and ran up 65% in four months. Abercrombie & Fitch , one of 2023’s best-performing stocks, had a 94 rating before it soared 342% in nine months starting in June 2023.

Those stocks weren’t flukes. In a study of the biggest stock-market winners from the early 1950s through 2008, the average RS rating of the best performers before they began their major price runs was 87.

To see relative strength in action, consider Nvidia . The chip stock was an established leader, having shot up 365% from its October 2022 low to its high of $504.48 in late August 2023.

But then it spent the next four months rangebound—giving up some ground, then gaining some back. Through this period, shares held between $392.30 and the August peak, declining no more than 22% from top to bottom.

On Jan. 8, Nvidia broke out of its trading range to new highs. The previous session, Nvidia’s RS rating was 97. And that week, the stock’s relative strength line hit new highs. The catalyst: Investors cheered the company’s update on its latest advancements in artificial intelligence.

Nvidia then rose 16% on Feb. 22 after the company said earnings for the January-ended quarter soared 486% year over year to $5.16 a share. Revenue more than tripled to $22.1 billion. It also significantly raised its earnings and revenue guidance for the quarter that was to end in April. In all, Nvidia climbed 89% from Jan. 5 to its March 7 close.

And the stock has continued to run up, surging past $1,000 a share in late May after the company exceeded that guidance for the April-ended quarter and delivered record revenue of $26 billion and record net profit of $14.88 billion.

Ken Shreve  is a senior markets writer at Investor’s Business Daily. Follow him on X  @IBD_KShreve  for more stock-market analysis and insights, or contact him at  ken.shreve@investors.com .