Supermarket Price Hikes Loom as Supplier Costs Rise, Impacting Shoppers Soon
Australian shoppers could soon experience a new wave of cost-of-living pressure, with supermarket prices predicted to increase within the coming weeks. Major retailers Coles and Woolworths have confirmed that some suppliers are already pushing for price hikes, but a delay in the system means consumers have not yet felt the full impact at the checkout.
Delay in Price Changes Under Grocery Code
Under the grocery code of conduct, supermarkets are granted 30 days to negotiate any price changes, creating a buffer between rising supplier costs and the final prices paid by shoppers. This buffer period is now nearing its end, setting the stage for potential price adjustments.
Fred Harrison, CEO of Ritchies IGA, highlighted on Sunrise that while prices have remained relatively stable in recent weeks, pressure is mounting, and price reviews are imminent. "There is a formula ... the grocery code of conduct. Fuel levies come into play. Often, a supplier may ask us to apply a fuel levy to their product," Harrison explained.
Timeline and Impact on Fresh Food
Harrison warned that any price increases may not be immediate but are likely to occur within four to 13 weeks, depending on how long fuel prices stay elevated. Fresh food, particularly fruits and vegetables, is expected to be the first category affected. "Fruit and veg is probably the product that reflects what's happening in the market at any one point in time. So there is certainly fuel levies coming in across the produce game," he said.
Although increases are anticipated, Harrison stressed they are unlikely to be dramatic, with fuel levies typically in the single-digit percentage range. However, even minor shifts could squeeze household budgets already under strain from broader economic pressures.
Retailers' Response and Supply Chain Stability
Retailers are attempting to maintain competitive pricing where possible. Harrison noted, "We've never been more price competitive as we are today. But we understand that, particularly in fresh food, there has to be some adjustment with things like fuel levies being applied to produce."
Unlike during the COVID-19 pandemic, where shortages caused significant disruption, current supply chains remain stable, with stock continuing to flow smoothly. This stability may help mitigate some of the price pressures, but it does not eliminate the looming increases driven by supplier costs and fuel levies.
As Australian households brace for these changes, the focus remains on how supermarkets will balance cost adjustments with consumer affordability in the weeks ahead.
