What’s Going On With Australian Supermarket Prices?

Australian supermarkets are really expensive. In the 12 months to August 2023, food prices across Australia rose 7.5 per cent, while farmers say they’re getting shortchanged on their stock, workers strike for better pay and Coles and Woolworths rake in record profits amid a cost of living crisis.

But it’s all coming to a head after an independent federal review launched last week with the aim to find out what’s going on.

On Thursday, Queensland Premier Steven Miles met with and questioned the CEOs of Coles, Woolworths and Aldi on why farmers were getting paid less and less while shoppers paid record-high prices.

“I think the starting point here is scrutiny and transparency. Queenslanders deserve to know just how much supermarkets are paying farmers, and why they’re not paying less for their groceries,” he told ABC Radio on Thursday morning. 

When asked if he had evidence of price gouging, Miles said: “Well, it looks that way to me.”

“I’ve heard these stories firsthand from farmers about just how these supplier agreements are driving down farm gate prices right when their costs are going up, and I know from visiting the supermarket myself, as well as from talking to Queenslanders, the price of fresh food just hasn’t gone down anything like what the price farmers are getting has,” he said.

This comes a month after the Greens launched a senate inquiry into supermarket’s high prices and one week after the federal government announced an independent review of the Food and Grocery Code of Conduct and supermarket prices to investigate claims of price gouging.

The code is a binding section of the Competition and Consumer Act that ensures above-board practices in the ways Aldi, Coles, Woolworths and IGA deal with both suppliers and shoppers. It was introduced to improve standards of business behaviour in the sector. 

Upon appointing former Labor cabinet minister Craig Emerson to head the review, Prime Minister Anthony Albanese said his government was committed to tackling the cost of living crisis. 

“We have been clear – if the price for meat and fruit and vegetables is going down at the farm gate then families should be seeing cheaper prices on supermarket shelves too.

“Supermarkets have a duty to make sure they’re providing affordable options for all Australians, especially when they’re making savings on their own costs.

“We’ve made looking after consumers a key priority over the past 18 months and we’ll keep looking at every option to make sure Australians aren’t paying more than they should or getting less than they deserve.

“If there are further steps that are needed then the Government will not hesitate to take action.”

Those further steps were hinted at on Tuesday, when Albanese said he supported giving expanded powers to the ACCC, Australia’s consumer watchdog, so it could potentially launch a lawsuit against the supermarket giants over claims they intentionally increase prices of some products for a brief period before marking them down as discounted, therefore exaggerating the price drop. The ACCC is “carefully looking” at whether this is deceptive conduct. 

But the commission currently has limited powers to investigate price gouging, so Albanese said at a press conference: “[If] the ACCC asks for more powers, my government is up for giving it to them.”

He said his government was “concerned” about what Australians pay at supermarkets and noted the discrepancy between what farmers get paid for their produce and what customers are charged. 

“We are saying that when prices go down, when … supermarkets … are purchasing from farmers, that should result in cheaper prices for consumers,” he said.

If you’re lucky enough to live in a city, there will be hundreds of small, independent businesses all around you that will offer cheaper, higher quality and a better variety of produce. 

One reason for this is supermarkets’ long supply chains. 

When farmers harvest their produce, they send it straight to markets, like Melbourne’s famous Queen Vic Market. Retailers – like your local green grocer – buy their produce from markets each morning, which they then sell from their own stores. Or consumers can shop there themselves.

On the other hand, supermarkets add more steps (and more people) to the process – transporting produce across the country to be sorted, packed and repacked in warehouses before anything arrives at the actual supermarket. 

Produce at markets or grocers also doesn’t need to fit the unnatural size or shape beauty standards that supermarkets set, which are notoriously wasteful.

And markets and grocers are beholden to the same expectations that all common fruits and vegetables will be sold year-round. You won’t see asparagus at a market in autumn because it’s out of season, but a supermarket will have it available, grown in expensive, artificial conditions or shipped halfway across the world and sold for a small fortune. 

Ultimately, supermarkets charge more for the convenience of shopping for everything in one place. But if you venture up your suburb’s high street for your groceries, you can probably get everything you need from a few neighbouring shops, for less.

Aleksandra Bliszczyk is the Deputy Editor of VICE Australia. Follow her on Instagram.

See more from Australia Today on vice.com and on TikTok.