Not imagining it: Woolworths, Coles share how much extra your groceries cost

Coles and Woolworths have released their quarterly sales figures. Images: Getty
Coles and Woolworths have released their quarterly sales figures. Images: Getty

Australia’s largest supermarkets Coles and Woolworths have both made masses of money in recent months due to coronavirus stockpiling.

Coles’ supermarket sales were up 13.8 per cent in the January to March quarter, an increase of $998 million on the same period in 2019, bringing sales to $8.23 billion.

Woolworths reported a 10.3 per cent increase in food sales at its Australian supermarkets, bringing sales to $11.1 billion in its results announcement today.

But they’ve also been hit by supply and demand challenges, in addition to drought-related costs. And the two supermarkets have passed along the costs to Aussie shoppers.

At Woolworths, average food prices increased by 2.1 per cent, while Coles recorded inflation of 2.6 per cent.

Excluding fresh fruit and tobacco, Coles’ price inflation was 1.8 per cent, while Woolworths’ prices increased 0.6 per cent when tobacco was excluded.

According to a Woolworths statement, the price rises, were driven by “the continued impact of drought-related cost increases as well as fewer in-store promotions which were removed for a short period of time in March to help prioritise getting essential products to stores without the supply chain having to cope with the extra volume of products needed for a full week of specials”.

Australians were warned at the beginning of the year that drought pressures could see vegetable prices rise as much as 50 per cent, thanks to ruined crops and bushfires posing expensive logistical questions.

But prices have been rising since September last year, when the drought damaged Australia’s “food bowl”.

Coles listed similar challenges to Woolworths in its quarterly sales results, naming “unprecedented demand” leading to a “lower promotional mix”.

“Inflation was seen across all categories, particularly dairy, deli and meat, with the latter largely a result of the break in the drought and increased availability of feed causing farmers to restock their herds thus limiting supply,” a Coles statement said.

Will these elevated prices last?

Eagle-eyed grocery shoppers began noticing the lack of special promotions in March, accusing the supermarkets of price-gouging.

However, aisles stripped of specials could soon be just a bad memory.

Noting the high number of Australians out of work, Coles CEO Steven Cain yesterday said returning to a full program of specials was a priority.

“Clearly value is going to go to the top of the agenda, which is why getting back to a full specials program is top of the agenda for us and we will also be doubling down and trying to grow the Own Brand offer,” he said.

Woolworths said promotional activity has already returned to normal, with the number of in-store promotions “now broadly in line” with the pre-Covid 19 sales frenzy.

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