Coles, Woolworths and ALDI expect grocery bills will continue to rise

The true extent of the supermarket labour shortage has been laid bare as one boss says he’s struggling to find workers because of one well-paid job.

Cost of living pressures are surging for many Australians and supermarkets have warned there is more pain to come for your weekly grocery bill.

Labour shortages, the cost of raw materials, and the rising cost of fuel and utilities are among the factors impacting the price of groceries.

Speaking at The Australian’s Global Food Forum this week, Coles chief executive Steven Cain said Australia had a labour crisis across many sectors.

“It’s been compounded by what’s going on with Covid and the flu, our absenteeism today is twice normal with Covid and the flu, and the churn rate in most industries is increasing,” he said.

“I was talking to one of our store managers last week and asked him what the greatest challenge was.

“He said it was definitely trying to find the right people with the right skills, but he lost one on the shopfloor who is going to be an $80,000 a year dishwasher.”

Coles chief executive Steven Cain says Australia is facing a labour crisis. Picture: NCA NewsWire/James Gourley

Mr Cain said grocery suppliers were also calling for further price hikes.

“We have got five times as many requests for price increases as we had last year. Five times,” he said.

A Coles spokesperson told NCA NewsWire on Thursday that the supermarket’s focus was on keeping the costs down for families.

“We appreciate that there are a number of factors driving inflation for all retailers, including increases in the cost of raw materials, energy price rises and freight costs, however there are a number of ways in which we deliver value to customers,” they said.

It includes weekly specials and other offers such as Flybuys points.

“This financial year to date, we have reduced prices on well over 2000 items across our range of more than 20,000 products,” the spokesperson said.

“Customers purchasing their My Weekly Specials items can save an average of $65 on their basket each week.”

Woolworths general manager of fruit and veg Paul Turner said heavy rain and low sunlight in Queensland had led to a reduction in supply and quality of zucchini, beans and broccolini.

Woolworths says some products are in short supply due to heavy rain in Queensland. Picture: NCA NewsWire/Jeremy Piper

It was the same for truss, gourmet, cherry and solanato tomatoes, he added.

“We’re still seeing challenges with lettuce and berry supply, so while the new crops have been planted, it will take a few weeks for stocks to return to more stable levels,” he said.

“Right now apples and citrus are at their peak, and pears and white washed potatoes are in strong supply and great value for our customers.”

Mr Turner said Hass avocado season was now underway and Woolworths had dropped prices on more than 300 winter essentials.

Woolworths has about 5000 different products on special every week.

In May, Woolworths slashed the price of more than 300 winter products until August, including roast pork, soups, and cold and flu medication.

Woolworths also recently introduced more than 650 own brand products to its low price program, including flour, sugar and snacks.

ALDI insists it is cheaper than its competitors. Picture: NCA NewsWire/Paul Jeffers

Third quarter results in May showed Woolworths vegetable prices were in inflation, while fruit had remained in slight deflation for the first three months of the year, driven by apple and avocado prices.

Woolworths reported an overall average price inflation of 2.7 per cent.

For the same period, Coles reported inflation of 3.3 per cent.

In ALDI Australia’s 2022 price report, released last month, the company said a basket at ALDI was at least 15.6 per cent cheaper than other supermarkets, meaning an average family could save $1555 a year.

“Our research shows that the majority (88 per cent) of Aussie shoppers are looking at changing their spending in the next year, and that starts with finding the best deals around,” ALDI Australia managing director Oliver Bongardt said in the report.

According to the report, an average family of two adults and two children spend $192.19 weekly or $9,994.05 yearly on groceries.

But with no end in sight to Australia’s economic woes, it seems prices are set to continue rising for some time.

Supermarkets are facing cost pressures across their supply chains that are being passed on to consumers. Picture: NCA NewsWire / Jeremy Piper

Australian Food and Grocery Council chief executive Tanya Barden told NCA NewsWire Australian food and grocery manufacturers had faced costs that were affecting the entire supply chain.

“There have been significant increases in their costs as a result of a combination of factors: the pandemic, which has affected workforces and the availability of key inputs; flooding and severe weather which has impacted supply chains and shipping costs; and geopolitical factors, including the war in Ukraine, which have impacted global commodity prices,” she said.

“Costs for ingredients, packaging and shipping have all been affected. The global oil price rise is affecting the cost of transport, packaging materials and fertilisers.

“For businesses this is driving packaging costs up by 10 to 20 per cent, and fuel costs up 10 to 15 per cent.”

Ms Barden said it followed a decade of local food and grocery manufacturers absorbing cost increases.

“Many of those businesses have reached a tipping point where they need to pass through costs to remain viable,” she said.

“The difficult reality is this is a global trend and unfortunately the costs are expected to keep coming.

“The pressures on costs are across the entire supply chain – from farmer right through to the retailers – and it will get worse before it gets better.”