The city's Department for Consumer Affairs (DCA) said the firm had to meet standards on weighing and labelling.
The deal means customers "are better protected from overcharging", it said.
Whole Foods admitted to making mistakes but said there was "no evidence of systematic or intentional misconduct".
It
said it agreed to the settlement, which was below the $1.5m originally
demanded by the DCA, "to put this issue behind us so that we can
continue to focus our attention on providing New York city customers
with the highest level of quality and service".
The DCA first
accused Whole Foods in June after an investigation found mislabelled
weights on 80 types of pre-packaged products it tested.
The
natural foods and organic retailer, which has outlets in the UK, was
said to have overstated weights of pre-packaged meat, dairy and baked
products.
Last year, Whole Foods agreed to pay $800,000 in
penalties and improve pricing accuracy after a separate investigation
into alleged pricing irregularities in California.
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