By Emma Koehn
Major supermarkets are steering consumers towards deals on home brands with price freezes on pantry staples to help with the affordability of groceries, but local food manufacturers say rising costs may still lead to price increases on other products.
At the start of this month, Coles said it would keep many of its pantry essentials at a $1 or less, including pasta, soups and tinned tomatoes. Coles has also been encouraging shoppers to pick its home-brand products by offering more Flybuys points for the purchase of Coles-branded products.
Woolworths chief executive Brad Banducci was set to highlight the price freezes in an email to customers this week.
Woolworths has promised to freeze the prices of hundreds of its grocery staples until the end of this year, aimed at giving customers certainty on the cost of products from party pies to nappies.
Chief executive Brad Banducci in an email to be sent to customers this week will say food inflation has grown “to impact almost every product category”.
Banducci’s note to customers will acknowledge that poor weather conditions have further compounded cost pressures, leading to items such as iceberg lettuces being priced at more than $6.
Australian Food and Grocery Council chief executive Tanya Barden said the continuing problems along supply chains were a global issue that will continue to put pressure on food suppliers.
“These cost increases are affecting every part of the food supply chain from farms to retailers, and local manufacturers will need to pass on some price rises in order to remain in business,” she said.
A Coles spokesperson said that on top of keeping hundreds of staples to $1 or less, it has also tried to drop prices across the rest of its in-house brands.
“Since January, we have reduced prices on over 1,000 items across our range of more than 20,000 product,” they said.
Not all grocery chains are going down the route of special price promises for staples. A spokesperson for Aldi said it was already well placed to beat its competitors on price amid food inflation and would not be following specific price deals on staples.
“Rather than promotions on a select range of goods, we believe that offering low prices every day across our whole range delivers more meaningful savings that Australians can rely on,” the spokesperson said.
A spokeswoman for IGA owner Metcash said the company monitors the market to make sure its Community Co and Black & Gold brands were competitive. She said the vast majority of the 1300-strong IGA store network also signed up to a price-match program.
“As part of this program, each week we check the prices of hundreds of everyday products and match the lowest prices of the big supermarkets,” she said.
ASX-listed retailers have seen their share prices hit hard this week as experts warn inflation and interest rate rises present some of the toughest conditions for retailers in more than a decade.
Consumer staples stocks are faring better than those that court discretionary spending, such as furniture and electronics retailers.
Despite this, the major supermarket chains have suffered over the past week: Woolworths shares are close to 1 per cent lower, Coles shares are down 1.9 per cent and Metcash is behind 4 per cent over the past five days.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.