Australian Supermarkets See Lower Price Hikes Than Other Nations

Australian grocery prices have risen 24% since 2019-20, a little higher than the 22% increase in overall goods and services but still lower than price hikes in other developed nations. While critics argue that supermarket giants are using market power to overcharge consumers, the data suggests the Australian grocery sector has kept price rises relatively in check compared to the UK, the US and Canada.

The Australian Competition and Consumer Commission (ACCC) recently examined supermarket pricing and did not recommend breaking up the industry’s dominant players, a position supported by the government. This has led to criticism from those who believe the duo of major supermarkets wields excessive pricing power. The ACCC noted that Woolworths’ profit margins have increased only slightly since the start of the COVID-19 pandemic, contradicting claims of large-scale price inflation by big retailers.

Despite the concerns, Australian grocery inflation appears to be among the lowest in the OECD, with supermarket prices rising 24% compared to a 33% increase in the UK and over 40% in some other developed countries. A typical household in Australia spends $27 less per week on groceries than a British household making similar purchases. This challenges the notion that supermarket giants are manipulating prices to exploit consumers on a large scale.

Economists suggest that inflation in Australia has been driven more by global economic factors - such as supply chain disruptions and stimulus-driven demand - rather than price gouging by major retailers. While concerns about market concentration remain, the focus may be better placed on increasing competition through planning reforms rather than imposing tighter regulations on pricing. The Reserve Bank and Treasury maintain that corporate profits have not been the main driver of inflation in recent years.

With the ACCC maintaining vigilance on any actual collusion and pricing misconduct, the broader issue remains ensuring a competitive grocery sector through better market regulations rather than immediate structural breakups. The global nature of inflation suggests that external economic pressures, not just supermarket pricing strategies, have influenced the rising cost of living.

Source: Australian Financial Review, VICE, RetailAsia