Grocers price increases - much higher than inflation?

Having just wrestled with Coles Online’s new website, I noticed that a few items seemed much more expensive than remembered. So I compared items that I purchased a year ago with the same item at its current price, trying to avoid seasonally affected produce that fluctuates in price, and trying not to include items on special.

Of course this is not a big sample but it’s a real sample for me and suggest that my shopping bill has gone up by 20% in less than 12 months. Are the supermarkets capitalising on inflation, or are things worse than official figures show? Should Coles be asked to justify? At least, how do they justify the items that have increased by very large amounts? The bulk pack of NRG batteries was one I noticed that went up by 43% in the last month. (It is impossible to compare this example against other retailers because Coles seem to be the only sellers of NRG, perhaps a house brand).

I’ve not cherry-picked the items included, they are just those for which I could find a price now and a year ago from my invoices. Given that a fair chunk of inflation has been due to fuel and energy, you would think that household shopping items would have increased less than the average 7 or 8% inflation that has been reported.

Is Choice in a position to do a similar but better study or raise the issue with the big retailers?


I don’t shop at Coles, but I can say the same about other places I buy groceries. Prices have definitely gone up a lot.

But groceries form only a small part (around 17%) of the calculation for inflation, the CPI.

And what items are tracked in the food and non-alcoholic beverage ‘basket’ would be considerably less than your list.

So what is seen here is adjustments in the supply and demand equilibrium, and there have been many issues that have impacted on the supply side these past two years.

Economics 101.


Exactly, and again, because headline energy costs have increased more than average inflation, therefore you’d think there is scope for the groceries to have increased less.

Again yes, but the question being asked is – are current prices a fair reflection of supply restriction and/or input cost increases, or are some retailers taking advantage of price confusion and customer ignorance to increase prices beyond what is justified i.e. are they making superprofits?

In particular, transport costs were responsible for a good proportion of 2021/2 price increases, but in the last few months transport costs have eased considerably, yet there has been no visible reduction in prices.

It is hard to comprehend any supply side issues justifying a 43% increase in AA battery prices, and in fact no other retailers or battery brands have increased much or at all. Furthermore other pack sizes of the same NRG batteries have increased much less, so I would suggest this is a conscious change by Coles’ pricers. Flavoured mineral water (33% price increase) has few input costs other than transport, packaging and wages, and it is improbable that all those costs have increased by 33%, especially given above-mentioned recent transport cost reductions.

Perhaps increases in world coffee bean prices can explain a hefty rise in the price of my favourite pods (I know…)? But no, coffee beans were considerably more expensive in Jan 2022 (and had been for 5 months) than they are now and for the last three months. Maybe manufacturing delays are longer than three months, so prices will drop soon. We will see.

Other than special products like coffee with highly variable input costs, it is hard to see why any of the items on my list should have increased by more than inflation’s 7%. If inflation is x%, then average (local) input costs will rise by x% and resulting prices the same. In fact input cost changes over the year would support a lowering of prices - this excellent site Commodities - Live Quote Price Trading Data gives historical commodity prices and of those I checked almost all were trading currently for the same or less than a year ago. Rubber, cotton, urea, propane, steel are substantially lower, and plastics, bitumen, aluminium, corn, canola, beef, poultry, ethanol, platinum are about the same. Salmon, and lithium are higher.

It is true that most commodities peaked severely during Covid but in the last quarter most have fallen to pre-covid levels give or take. If these falls are yet to work through the system, again we should expect lower prices soon.

I don’t buy the supply and demand argument here - afaik nothing in my list above (or their major inputs) is currently in short supply. Some electronics (and weapons and ammunition :grimacing:) are definitely short, but alkaline batteries, coffee, mineral water, butter beans, canola and palm oil (for margarine, up 30% at Coles) … er, no.

I still believe there is a good argument for an informed investigation into recent inexplicably large grocery price rises (including discovering how much of these increases are thanks to manufacturers, wholesalers or retailers). It’s always easy to say ‘the market sets prices’ but as we all know, markets are a long way from perfect and suppliers are canny at taking advantage of the imperfections.


There may have been a dampener on price increases wanted by suppliers when the CPI indicated very low inflation as we had for a decade.

Not easy to justify a 10% increase to a big buyer like ColesWorth when inflation is officially 2%.

But as everyone knows we have inflation at higher levels now, and expect that prices for almost everything will therefore increase. Makes it easier for suppliers all along the chain to justify increases in price.

Some increase may be to cover increased input costs, some to recover for losses incurred due to Covid issues, and some may just be to increase profit margin.


I shop online at Woolworths, using their delivery cost discount scheme & prices have definitely shot up by 20-40% over the last 6 months. As a pensioner, I have to carefully watch how much I spend &, with many services also going up, I’m cutting back on food to the extent that I now drink meal replacement shakes twice a day ($11 a large jar on special which lasts a week). Given their predatory behaviour, I’m very glad to have found a way to spend less with Woolworths. I guess I’m protesting through my wallet. It’s the only thing they listen to!


It’s not just Coles. While I accept there are seasonal and logistical issues affecting prices, especially those of goods from overseas, I’ve read that suppliers have taken advantage of these increases to raise other item prices, as well as increase profit margins overall. When you’re a self-funded retiree, this is an unwelcome imposition, as it must be for those on low incomes.


I don’t keep dockets unfortunately but my memory serves me well on items I’ve purchased regularly over the last few years. I’ve also noticed the greater than expected price hike, and also thought that Choice could get hold of retail scan data as I’m sure comparisons not just over 12 months but pre covid would yield some very interesting results for public discussion.


My view is that there are very few producers/suppliers/retailers that haven’t been using Covid to check what the market will bear.

As factors such as supply chain, China factory shutdowns, staff shortages, fuel and energy prices, transport costs, weather events, etc etc gradually normalise over time (hopefully) I don’t expect prices to drift down. That’s because the supermarkets have worked out what price the average customer base will bear. I except hey will keep screwing down producers to maximise profit without passing on “savings” to customers.

I would like there to be transparency available for increased input costs that sustaining prices to customers. E.g. Basics such as bread, facial tissues and paper towels, fruit and veg, meat?

One eye-opener in this environment is that fruit/veg is often much more expensive in supermarkets than in fruit/veg markets (e.g. supermarket bananas $3.49 or more vs local market consistently $1.99kg). The quality is often better at the dedicated fruit/veg shops due to direct relationship with local growers.


On that single point a F&V shop has a small inventory and probably minimal waste. OTOH Colesworths buys in huge quantities, distributes to a large number of stores, and the waste from unsold product across their business is reasonably reflected in the higher prices.

Is the retail layer gaming the system? When prices are continually rising while profits are already at historic highs the ‘pub test’ of how ‘maximising shareholder value’ contributes is probably the underlying reason.


Given the profit margins of supermarkets, any excessive gouging would become obvious when profit figures are released.

The after tax net profits of Coles and Woolworths are less than 3% of sales. If they chose to increase prices by 20% when costs have only increased by 10%, this would result in net profits increasing by more than 250%.

Whilst the supermarkets might be pumping up prices a bit more than necessary, it is unlikely that this would form a significant part of the quoted 20% price increase over the past year.


Competition is normally reasonably effective in keeping supermarket prices reasonable even though the grocery market in Australia is a textbook oligopoly. In low inflation, consumers get to remember prices and will notice increases to a large extent, so Colesworth are relatively careful with most pricing. But in high inflation times, consumers lose track of prices and it is easy for the retailers to increase prices more arbitrarily because consumers: a) have lost track of individual item prices , and b) are expecting increases anyway, and don’t/can’t do the maths of reasonablness of increases.

A rational retailer putting shareholder returns ahead of their social licence will surely take advantage in this way, looking towards maximising short term results. A retailer holding more to their social licence might choose not to take advantage, hoping for longer term rewards from customer appreciation and loyalty. Unfortunately retailers know that without help, consumers have short memories and limited analytical skills, so there is little likelihood of the retailer taking the latter course of action. The only way consumers will notice the difference between the ‘good’ retailers (social licence :innocent:) and the ‘bad’ ones (shareholders’ returns :money_mouth_face:) , and therefore respond appropriately, is if organisations like ACCC and Choice bring it to public attention. And that 's where it stops, because both the ACCC and Choice keep away from such sophisticated engagements, preferring to go to bat on clear and simple issues like dangerous toys.

I really wish Choice would investigate this issue :face_with_monocle:, but have never had any luck with previous suggestions so I guess it is not likely this time either.


Nice analysis JMR. I’m not sure of Choice’s limits on terms of reference for their involvement in this type of issue. This whole area is huge, even for the ACCC. Similar in some ways to trying to track what drives petrol price cycles and the obvious cartel behaviour there around Xmas, school holidays, etc. As they say - if you want to eat an elephant (uggh!), best way is one bite at a time.

Perhaps if Choice could, instead of going it alone on big ugly issues, cooperate with like-minded investigative resources like The Conversation, the ABC e.g. 4 Corners, academia there may be an opportunity to look into the retailer competition vs profit vs good social neighbour angle?

Also perspective from charities such as Second Bite would be invaluable. They partner with Coles, which as explains is “An effective way to reduce your food waste, save time and maximise tax benefits” - i.e. deduction offset to profit instead of losses due to in-store markdowns and wastage.

Wider than the supermarkets, a lot of Second Bite’s partners and stakeholders know the retail industry and associated services inside out and might be happy to shed some light. They list their classes of partners as: Farmers and growers, Manufacturers, Retailers and wholesalers, Government organisations at the Federal, State and Local level, Peak industry bodies, Trusts and foundations, Charities, Churches, Schools, and Individuals. Such a wealth of inside knowledge.

I’m just adding a couple of articles below (which seem not to be behind the News paywall) on the Covid-related price issue which I found interesting:
Aldi warns price hikes on groceries ‘inevitable’ amid inflation rise | — Australia’s leading news site and
Metcash tells IGA, Foodland supermarket owners not to increase prices | — Australia’s leading news site


I would prefer that Choice not waste my subscription money on trying to check and report on issues such as grocery prices. They go up, they go down. Specials are always on offer.

For decades the ACCC has investigated fuel prices, and the cycles that seem at first look to be price manipulation. And they have NEVER managed to find anything that could be pinned down as anything illegal, or contrary to fair market activities.

Unless Choice is staffed with experts in economics, stay away from how markets work in the Capitalist economy.

Inflation is an insideous effect on the economy, which causes all sorts of problems, which is why reserve banks around the world have declared war on it by raising interest rates.

Don’t like prices going up a lot? Then seek out cheaper products. Or only buy on special.


We disagree then. I think this would be one of the more useful things Choice could do, looking for egregious advantage taken of inflation. Like just about everything, the dose makes the poison. I am not taking any issue with the fact that prices go up and down, I’m trying to address excessive increases that might be above what is justified in a period of inflation.

We are talking about a possible case of market failure, precisely what watchdogs and consumer advocates are there for.

Well sure, but we don’t need to be told the bleeding obvious, and it doesn’t address the issue I raised. Please don’t trivialise my issue just because you can sprout economics 001. What do you think Choice should spend your subs on?


Thanks for the interesting articles … Metcash as a wholesaler to the independent supermarts seems to be defending it’s own bottom line with it’s advice to retailers to ‘not increase prices’. We can assume that Metcash is increasing its wholesale prices, so no skin off their nose to give such wise advice to retailers! i.e. if you retailers don’t increase prices then you’ll sell more and so we’ll sell more to you, and we will therefore earn more bec we’ll maintain our margins even if you don’t.

re Aldi, I don’t shop often there, but my limited observation is that there are NO increases of 20% and more as observed at Coles.

From Choice’s About page: “we work for fair, just and safe markets that meet the needs of Australian consumers. We do that through our independent testing, advocacy and journalism.” This would seem to make the issue a prime candidate for Choice’s attention.


The topic was started by someone providing details of price movements relating to 38 items, around 0.2% of the total product range. The might or might not be errors in this data e.g. some amounts might be special prices which would skew the data.

No evidence has be provided to draw a conclusion that Coles is doing nothing more than adjusting prices to allow for increases in the cost of stock, staff, rent electricity etc.

Do you have some better information to show that Coles and/or Woolworths are increasing prices in excess of the rate that their costs have increased?

How many hours would you expect Choice staff to spend on investigating this issue to a level that would satisfy you?

As you observations are only limited, the capitalisation of the word “no” is probably not justified. As Aldi does not offer electronic receipts or list prices of non-special items on their website, it is more difficult to keep track of price movements. I do know that around 12 months ago 1.5 litre bottles of soft drink were priced at $1.69, a few months later the price increased by almost 30% to to $2.19.

Coles and Woolworths are favourite targets for people who want to complain about inflation. The are frequently accused of ripping off both customers and suppliers. However the total 2021-22 year after-tax profit for both groups, including non-supermarket businesses was $2.56 billion. Per capita this is around $100 per year or less that $2 per week.


Exactly so perry. Retailers have had a once in a lifetime gift with Covid. Customers have had all their mental models and expectations of product pricing (and availability) smashed. Retailers can work with this to kick up margins without explanation except to blame any Covid related excuse that’s worked in the past 3 years.

I can see that some rises may be necessary, but I think the retailer should explain to customers where those rises are over the odds. e.g. Aldi tissues have gone from $1 to $1.70 per box and are staying there. I heard the boss of Kleenex say that the price rises are due to gas prices, part of their manufacture process. I want transparency of input costs to product delivery, so we can understand what’s a real reason versus just opportunistic leveraging of ‘what the market will NOW bear’.


You want some existing data @Glenn61 and @JMR? Lots of stakeholders collect data.

I just want to have price transparency on various market segments. Here is an example of that type of data - analysed by both grocery product segment and consumer demographic segment. It’s provided on a quarterly basis with updates to the data and the forces that are moving those statistics.

You can study the methodology entrails at the end of the document if you choose.
“Price observations are collected each month for the same extensive range of popular grocery products available from Coles and Woolworths. These products have been carefully selected to represent common groceries purchased by consumers across 14 supermarket product categories. Although limited to the two major national supermarket retailers, analysing Coles and Woolworths prices alone accounts for more than 70% of monthly grocery purchases in Australia.”

This issue is the update for October 2022. It’s the FRUGL GROCERY PRICE INDEX . You can subscribe to updates.

If you want to shop the cheapest, the FRUGL app may be of use to you. Frugl Grocery is a free app for iOS and Android that keeps you updated with the best grocery prices every week from Coles, ALDI, Woolworths, IGA and more.


Your original issue was that your selected ‘basket’ of groceries seems to have increased more than the official inflation rate, and therefore should be investigated for price exploitation by Coles. By Choice as an organization.

Firstly, few of the groceries in your list are used in the calculation that the ABS uses to calculate the groceries part of the CPI, that in turn is used as input to the measure of inflation. Basic bread, milk, fresh veges, etc.

Secondly, that leads to an obvious non sequitur logical fallacy that since YOUR groceries have gone up by more that the official CPI index and inflation, there must be company price exploitation going on to raise prices by more than the official inflation rate.

Thirdly, are you perhaps advocating for price controls?


Good piece of research JMR. And I’m sure there’d be a close correlation with Woolworths. Only last week I noted my favourite pancake mix had risen 25% at Woolworths. But trying to get the true measure of a price shift is not easy. Inflation, including fuel has had an impact. So too, and it’s continuing, has covid. The impact of scarcity has always been a strange one that economists dismiss with ‘supply and demand’. Then there’s buying power - the big guys negotiate large volumes for a significant drop in price. This action is often not repeatable at the same price and could explain the AA battery price. Certainly fruit and veg seem to be priced from the roll of a dice. In successive weeks strawberries have been $5.95, $2.95 then $3.95 all for the same weight. As for price justification - the best approach is to refuse to buy. I found a local supplier to have a pancake mix, so I’m trying it.