In some countries grocery prices have come down — not in Australia

By Fiona Blackwood

Topic:Supermarkets

Grocery prices are rising faster than wages growth. (ABC News: Ebony ten Broeke)

In short:

In the past 16 months, the price of grocery shopping in Australia has outstripped wage growth.

In the UK, where there is a more competitive supermarket structure, grocery prices in some stores has gone backwards as much as 2 per cent.

What's next?

There are calls for a royal commission into what is leading to a lack of competition among Australia's major supermarkets and what legislation would be needed to change that.

If you feel like grocery prices have gone up over the past year, it is because they have.

And that is even before the impacts of the Iran war on food prices have been fully felt.

"Wages are not catching up and, as a result, you're really feeling the pinch when you get to the check-out," Lisa Asher, retail academic researcher at the University of Sydney, said.

Consumer research company Canstar looked at grocery prices at Woolworths in March 2025 and compared the same items in July 2026.

In 2025, the grocery bill was $213.89. In 2026 the same items cost $232.02, up 8.5 per cent.

Woolworths is Australia's biggest supermarket chain.

In its annual report, the supermarket said its average prices, excluding tobacco products, had declined across the 2025-26 financial year.

"Deflation in Grocery was driven by lower shelf prices and an increase in promotional activity relating to Easter, somewhat offset by inflation in Fresh driven by Meat, with higher prices in lamb and beef," the report said.

Grocery bills are going up. (ABC News: Ebony ten Broeke)

Canstar has previously compared Coles and Woolworths shops and found less than $2 difference between the two.

According to the Australian Bureau of Statistics, wage growth was 3.3 per cent for the year to March this year.

Basics like milk and mince have gone up in price, reflecting the impact of weather events on farmers.

Eden Radford says many people are changing how they shop. (ABC News: Scott Preston)

Canstar spokesperson Eden Radford said many people were changing how they shopped, and trying to save where they could.

"They're doing things like bulk buying, going frozen where they can, shopping around, and even doing things like replacing meat with things like lentils," Ms Radford said.

How much are Australians actually spending?

Chris Jackson says he's noticed an increase in prices. (ABC News: Ebony ten Broeke)

Chris Jackson said feeding a family of four had gone from a $300 shop per week last year to what felt like $400 plus now.

"I am really conscious of making sure we are feeding the kids the right things, so we're kind of forced into buying certain things."

Roseanne Browning says she is buying less. (ABC News: Ebony ten Broeke)

Roseanne Browning said the cost of buying food had "skyrocketed".

"I buy less, I don't buy chocolate, I don't buy confectionery."

Anne Coleman (right) says while she's spending more, she feels like she's getting less. (ABC News: Ebony ten Broeke)

Anne Coleman lives on her own and said her weekly shop had gone up by $20 to $30.

While she said she was spending more, she felt like she was getting less.

"I noticed that toilet paper has shrunk in width by two centimetres — I was quite shocked by that."

Sea Miller says he's noticed the prices of some items increase. (ABC News: Ebony ten Broeke)

Sea Miller said butter and sunscreen had risen rapidly.

"Sunblock went from $3 for the small tube to $4.50 in a year.

Woolworths is Australia's largest supermarket chain. (ABC News: Ebony ten Broeke)

Woolworths's headline profit surged by 18 per cent to $1.1 billion.

Coles has reported a $1.1 billion full-year profit.

'Greedflation' making it harder to save at the check-out

Grocery prices have been rising for longer than just this past year.

Prices rose during the pandemic when supply chains were disrupted, and shipping costs went up.

Lisa Asher describes it as "greedflation".

"They [shipping costs] shot right up, and it took several years to come down and it never fully went down," she said.

Lisa Asher says the pandemic caused shipping costs to rise, but they didn't return to pre-pandemic levels. (ABC News: Scott Preston)

Supermarkets are paying more in wages, and the cost of energy and logistics have gone up.

The cost of farming has also increased.

"Fertiliser, maintaining their machinery and then consider things like interest rates," Ms Eden said.

The war in Iran, which started in February, has also been adding to the costs of groceries, fertiliser, fuel and transport.

Consumer group Choice has found grocery prices vary between states. (ABC News: Ebony ten Broeke)

Choice has found the state you live in does make a difference to how much you pay for groceries.

In Western Australia, the cost of a Coles basket is more than $3 more than the same basket in New South Wales.

An IGA shop in the Northern Territory is about $33 more than a similar shop in Victoria.

Differences between the states were mostly driven by variation in the cost of fruit and vegetables.

Grocery price variations between states are largely driven by differences in the price of fruit and vegetables. (ABC News: Jessica Black)

Australian shoppers 'paying a premium'

Lisa Asher said a lack of competition between the two big supermarkets in Australia was also having an impact.

She said customers were paying around 10 per cent more for groceries as a result.

Ms Asher looked at the price of a basket of groceries in New Zealand and the UK.

She found that in the past year in the UK, the value of a Sainsbury's basket of groceries increased by 4.5 per cent, while at Tesco it went down by 2.7 per cent.

In New Zealand, at Woolworths NZ the cost increased by 2.79 per cent, at PAKnSAVE by 4 per cent, and at New World by 4.18 per cent.

Lisa Asher says a lack of competition between Australia's major supermarket chains is one of the factors behind higher prices. (ABC News: Ebony ten Broeke)

Ms Asher said the UK had a more competitive supermarket structure.

"Tesco top-up shop has gone backwards in a competitive market of -2.1 per cent, despite inflation of 2.8 per cent [in the UK]," Ms Asher said.

Since July 1, the Australian Competition and Consumer Commission (ACCC) has been monitoring Coles and Woolworths to identify any "excessively priced" grocery items.

Customers can report any products to the ACCC, and supermarkets could be fined.

But concerns have been raised that excessive pricing can be hard to prove.

Under new powers, the ACCC can also block major supermarkets from expanding in areas where they would likely result in a loss of competition.

Lisa Asher is calling for a royal commission into big retail, including Wesfarmers and Amazon, to understand what is leading to a lack of competition "and what legislation would be required to actually change that".

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