Two Australian leaders have renewed concerns about customer exploitation by big supermarkets.
Queensland Premier Steven Miles wants supermarket CEOs to explain why reduced produce costs aren’t being reflected in grocery bills.
Nationals Leader David Littleproud has called for a formal investigation into supermarket pricing by the consumer watchdog.
Coles and Woolworths control roughly two-thirds of Australia’s supermarket sector.
Are supermarkets price gouging?
Price gouging occurs when a business charges an unreasonably high amount for a product.
In Australia, businesses can set prices that allow them to make a profit on goods and services – meaning it isn’t illegal for businesses to charge a price that customers think is too high.
However, businesses aren’t allowed to mislead or lie about the reasons for their prices or price increases.
Supermarkets and farmers
Coles and Woolworths both made annual profits above $1 billion last year.
However, many farmers reported decreased demand for their produce last year. For example, data from Meat and Livestock Australia showed a 60-70% reduction in prices for cattle and sheep meat producers in 2023.
It’s led to concern that supermarkets are underpaying farmers for their produce, and setting unfairly high prices for customers.
In December, the Senate opened an inquiry into Australia’s big supermarkets, including an investigation into Coles and Woolworths’ pricing patterns and increased prices of essential items.
Greens Senator Nick McKim said Coles and Woolworth’s dominance has led “to unfair pricing and stifled competition”.
However, Nationals Leader and Shadow Agriculture Minister David Littleproud downplayed the significance of the Senate inquiry, suggesting it wouldn’t “go far enough”.
Price gouging concerns
On Sunday, Littleproud called for the Australian Competition and Consumer Commission (ACCC) to investigate supermarket prices. He urged the ACCC to issue strong penalties for any retailers found to be acting unfairly.
QLD Premier Steven Miles has asked major supermarket CEOs for a meeting to discuss their pricing decisions. In a letter shared yesterday, Miles expressed his concern over the “widening gap” between what farmers receive and what customers pay.
Federal Government response
Treasurer Jim Chalmers said he is “concerned” about disproportionate pricing at supermarkets.
Chalmers said he is in “regular contact” with the ACCC, with further talks scheduled this week.
The inquiry is due to table its recommendations in May.
Coles and Woolworths both welcomed the opportunity to speak with Premier Miles. Coles said a “range of costs” like energy and packaging as well as market pressures influence how prices are set.
Woolworths maintained it pays farmers the market price for their produce, which can change as customer demand varies. It said it’s “always working to strike the right balance” between providing high-quality and affordable produce and supporting its suppliers.
Aldi told TDA it’s committed to selling groceries for an affordable price. It didn’t specify if an Aldi representative would meet with Miles.
A spokesperson for Metcash – operators of IGA – said they would look forward to meeting with Miles.
Metcash works as a wholesaler to independent grocers across Australia. It said the company has implemented several measures to support IGA stores and customers, including reducing its own profit margins.