Understanding Hungary's anti-shrinkflation decree for grocery retailers

Hungarian authorities have created an Amendment Act (Decree 1/2024) on measures needed to reduce food inflation and a new legislative framework. This legal update primarily addresses the growing issue of product shrinkflation, where the quantity of products is reduced while prices remain stable or increase, effectively lowering the value consumers get for their money.

The regulation targets traders involved in the grocery sector under the Standard Industrial Classification of Activities: 4711: Mixed retail trade in grocery stores, whose annual net turnover exceeds HUF 1 billion. This includes various types of establishments, from hypermarkets to smaller stores. The regulation applies to the display and sale of prepackaged products such as food items, detergents, and fabric.

Thus, the scope of the government decree covers prepacked products, including, for example, boxed biscuits, chocolate bars, ice cream, detergents, fabric softeners, etc. Therefore, the regulations to be presented cover not only prepacked foods but also other prepacked products.

The core requirement under this legislation is the mandate for traders to provide clear information to consumers regarding any changes in product packaging, specifically if new smaller pack sizes are introduced in the market. The requirement details that such changes must be communicated visibly in the store where the products are sold. For larger stores (e.g., hypermarkets), this information must be displayed at every entrance, whereas smaller stores should have it at a conspicuous spot near the entrance. Additionally, information should be displayed next to the product itself in a prominent manner.

Based on the mentioned act itself, traders who fall under its scope in Hungary are required to:

• Display information for two months starting from the introduction of changed packaging sizes,
• Use specific sizes and formats for information sheets as detailed in the regulation (e.g., A3 size at store entrances, smaller tags next to the product itself),
• continue displaying information if they keep selling products introduced between July 2023 and February 2024 that had size changes.

This regulation aims to enhance transparency and maintain the consumer's ability to make informed decisions amidst rising concerns about inflation and product value reduction.