Low-income families are spending a fifth of their income on groceries, with the price of a typical basket of supermarket goods increasing by more than 20 per cent in the past five years, according to a new interim report by Australia’s consumer watchdog.
The prime minister says “customers don’t deserve to be treated as fools by the supermarkets”.
“They deserve better than that,” Anthony Albanese said.
Know the news with the 7NEWS app: Download today
“This is an important piece of work and we will study it closely.”
The federal government directed the Australian Competition and Consumer Commission (ACCC) to conduct an inquiry into supermarket competition and prices at the start of the year, with a final report to be handed down in February next year.
So far the ACCC has interviewed more than 21,000 customers, received 80 public submissions, and held seven roundtable discussions with farmers and producers.
The ACCC says supermarket retailing in Australia is an oligopoly, with Woolworths and Coles accounting for 67 per cent of supermarket retail sales nationally. Aldi accounts for 9 per cent and Metcash supplied independent supermarkets 7 per cent.
ACCC Deputy Chair Mick Keogh says many consumers have said that they are losing trust in the sale price claims by supermarkets.
“These difficulties reportedly arise from some of the pricing practices of some supermarkets, such as frequent specials, short-term lowered prices, bulk-buy promotions, member-only prices and bundled prices,” Keogh said.
“During the remaining five months of our Inquiry, we will scrutinise whether, and if so how, the supermarkets may be using market power and the economic implications this has for Australian consumers and suppliers.”
The ACCC will also grill senior executives of the major supermarkets and other relevant stakeholders during public hearings in November, and will question their treatment of farmers and consumers.
Many grocery suppliers have told the ACCC that they consider they sometimes receive prices below the cost of production and have little choice but to agree to highly unfavourable terms, with these terms being subject to ongoing changes by the major retailers.
“The issues raised by a number of suppliers are concerning,” Keogh said.
“We are using our compulsory information gathering powers to examine this reported behaviour by the supermarkets, and will include any findings in our Final Report.”
Earlier in the week the ACCC launched legal action against Coles and Woolworths over alleged fake discounting, which will now play out in the Federal Court.
The Coalition and Greens are demanding Labor takes its action against supermarkets a step further by introducing divestiture laws, which could be used to force the supermarkets to sell off stores.
Anthony Albanese disagrees and questions whether such a policy would create extra competition.