The Greens have pointed fingers at retail giants Coles and Woolworths, alleging that they are profiteering at the expense of consumers by engaging in blatant price gouging.
The accusation comes amidst a backdrop of soaring profits reported by the two supermarket giants, even as consumers grapple with the burden of escalating living costs.
Highlighting the disparity between consumers’ financial strain and the hefty profits reaped by Coles and Woolworths, The Greens have condemned the practices of these corporations, labeling them as contributors to the ongoing cost of living crisis.
“Big corporations are causing this cost of living crisis – from the big banks, through to energy companies and supermarkets. While you’re struggling with the cost of living, they’re raising their prices whenever they like,”
The political party asserts that urgent action is required to rein in the market dominance of these supermarket chains, accusing the Labor Government of failing to address the issue adequately.
“The Labor Government has the power to rein in the supermarkets. Instead, they’re backing their corporate mates and letting them get away with it,”
In response to these allegations and in a bid to challenge the perceived monopoly of Coles and Woolworths, The Greens have initiated a Federal Senate Inquiry.
The inquiry aims to scrutinize the market power, competition practices, and pricing strategies employed by the major supermarkets.
Key areas of focus will include the impact of price-gouging on the cost of living for ordinary Australians, as well as an examination of the supermarkets’ treatment of suppliers.
Woolworths posts $1.62bn profit despite cost-of-living crisis
Woolworths has seen a significant rise in margins within its Australian food division, surpassing pre-pandemic levels, which has contributed to a robust profit outcome amidst a cost-of-living dilemma.
The company’s net profit grew by 4.6% to $1.62 billion for the full fiscal year, with total sales reaching $64.29 billion, stemming from its operations in Australian and New Zealand supermarkets, along with the discount chain Big W.
However, the nearly 20% increase in earnings from its Australian supermarkets is likely to draw attention from policymakers and consumers alike, especially as parliament and unions commence investigations into the sector’s pricing strategies in response to concerns about the rising cost of living.
Woolworths’ financial reports demonstrated that amidst the pandemic and inflationary challenges, the company has leveraged the situation to not only boost sales but also enhance profitability, with shoppers ultimately footing the bill.
Specifically, Woolworths’ operating margins, a key measure of profitability in the sector, surged from 5.3% to 6% within the fiscal year for its Australian food division.
Woolworths’ chief executive, Brad Banducci, said supermarket margins were not solely related to groceries, with upgrades to supply chains and improved business operations helping the group.
“It is not a direct result of food inside supermarkets,” he said. “The most important thing we need to do is provide value for our customers.”
The ACTU secretary, Joseph Mitchell, said: “Woolworths has been able to pass on more than the cost of inflation to their customers over the last year and now see profits that sit above pre-pandemic levels. It seems the average Aussie is copping it in the pocket whilst big business is fattening their bottom line.”
Ex-regulatory officials and economists have linked the surge in profit margins to limited competition in Australia, where Woolworths and Coles dominate two-thirds of the market share.
The fiscal year of 2022-23 correlates with heightened financial strain on households, marked by a series of interest rate hikes during that period.
Food margins have been on the rise at Woolworths, outpacing its rival Coles, which recorded a 4.8% increase in net profit to $1.1 billion. Coles’ profitability was hindered by a notable surge in theft incidents.
Both supermarkets indicated that while certain food prices, like cauliflower and iceberg lettuce, were decreasing, prices for many packaged goods, as well as dairy and bakery items, were still on the upswing.
