Coles and Woolworths will front a Senate Inquiry into claims they’re overcharging customers during a cost of living crisis.
The retailers control roughly two-thirds of Australia’s supermarket sector. Each company reported profits of more than $1 billion this year.
The probe will investigate if Coles and Woolworths are pricing products unfairly – an accusation both retailers have rejected.
Inflation
According to the latest data, inflation (rising prices) increased overall bybetween October 2022-2023. Food and non-alcoholic beverages rose by 5.3% during that time – down from a peak of 9.6% in September 2022.
Note: ‘Falling’ inflation doesn’t mean falling prices, it means prices are rising at a slower rate than before.
Food prices
Despite easing from the 2022 peak, food inflation is still higher than overall inflation.
Coles and Woolworths blamed rising grocery bills on operating and supply chain costs. However, the National Farmers’ Federation (NFF) said it’s not clear what costs the supermarkets are referring to.
“We know what Australians are paying at the checkout, and we know what we’re receiving as farmers – but who clips the ticket in the middle is shrouded in secrecy,” NFF President David Jochinke said.
Profits
Coles and Woolworths both reported significant profits for the 2022-23 financial year. Coles’ after-tax profit was $1.1 billion. Woolworths’ was $1.6 billion.
Both reported increased sales for the recent July to September quarter.
The supermarkets are likely to face questions over these profits and the rising cost of products during the Senate Inquiry, with “price gouging” expected to be a key area of the Inquiry.
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Earlier this year, Coles and Woolworths were given theAwards, with Consumer advocate group CHOICE accusing the big retailers of “cashing in during a cost of living crisis”.
What is price gouging?
Price gouging is when companies unreasonably increase the cost of their products.
Greens Senator Nick McKim said Coles and Woolworth’s dominance gives them power to “dictate prices”. He described this as a “duopoly” that’s led “to unfair pricing and stifled competition.”
The Australian Council of Trade Unions launched a price gouging inquiry earlier this year. It said 30% of the submissions it received flagged supermarkets as their main concern.
Inquiry
The Senate Inquiry into Coles and Woolworths has been launched by the Greens with support from the Labor Government.
Along with price gouging, the inquiry will also look into key areas like discounts, increases to the price of essential grocery items, and the high profits posted by the supermarkets during a cost of living crisis.
The inquiry is expected to commence hearings early next year.
Response
A Coles spokesperson told TDA it’s always looking at ways to reduce the cost of its items. They added that Coles is “not immune to the increased cost of doing business”.
Woolworths told TDA it understands Australians are feeling strained by the cost of living. It said it’s “working to deliver relief” in their grocery shop.
Both retailers said they’re participating in a number of other parliamentary inquiries into thecost of living.
