Cost of living senate committee hears from Coles, Aldi

One of Australia’s biggest supermarkets is absorbing the rising cost of goods from suppliers, in a bid to help struggling families keep afloat.

One of Australia’s biggest supermarkets has said it is absorbing overall supply costs, which in some cases have spiked nearly 10 per cent, to help keep prices low for customers as suppliers continue struggle to bring products to market after a difficult 12 months.

Major supermarkets Aldi and Coles, and MetCash, which owns IGA, gave insight into the rising cost of living before a senate committee on Wednesday.

Australians continue to grapple with increasing costs, with rising interest rates and dwindling household savings leaving many on the brink of crisis.

The committee is travelling around the country to hear about cost of living pressures, including the weekly shopping bill, that are impacting household budgets.

Australian households continue to face further financial pressure. Picture: NCA NewsWire / Naomi Jellicoe

Coles’ government and industry relations manager, Vittoria Bon, told the committee on Wednesday the supermarket giant had been impacted like many of its competitors because of factors related to Covid and flooding in 2022.

Ms Bon said Coles has worked to “absorb” overall cost increases passed on by suppliers battling with spikes in fuel and packaging prices.

“We work with our suppliers to pay them more to cover those costs,” she said.

“With fresh produce, we’ve certainly seen price increases … floods have knocked out transport routes and it’s also meant products haven’t been as readily available,” Ms Bon said.

“We’re paying dairy farmers more for the milk they supply Coles because they’re telling us their costs have gone up.”

Managing director for buying at Aldi, Oliver Bongardt, told the committee that managing the costs of increasing supply demands was very important to remaining competitive.

“There’s no point trying to buy the product at a lower cost (suppliers) can’t sustain,” Mr Bongardt said.

“They have evidence the cost increase is based on something real, and it’s our role to interrogate that correctly.

“In 96 per cent of those increases (in 2022) we found they were based on real cost increases suppliers were experiencing.

“It’s about having a fair and balanced approach and making sure it’s a two way route.”

Coles is working on delivering ongoing discounts for various products to help with the cost of living. Picture: NCA NewsWire

Aldi saw cost of goods rise by 9.2 per cent in 2022, Mr Bongardt said.

He said the supermarket had increased its retail prices by 8 per cent.

“It varies depending on the category, depending on where the products are coming from and what the commodities are on offer,” he said.

Australian wholesaler for IGA, Metcash, also appeared before the inquiry with CEO Scott Marshall stating the company had been impacted by inflationary costs in all categories, including availability of labour for suppliers.

Mr Marshall said there was hope things were improving, despite ongoing impacts to the supply chain.

“We also do believe and are seeing signs those inflationary numbers from suppliers are peaking and we believe they’ll ease at the back end of the year,” he said.

Ms Bon said Coles was also determined to continue to keep costs low for customers.

The supermarket’s Dropped and Locked campaign is expected to end in April but the company plans to continue to offer a number of discounts across 5000 products.

Aldi absorbed costs imposed by suppliers in 2022. Picture: NCA NewsWire / Jeremy Piper

Earlier on Wednesday, Liberal Senator Jane Hume, who is chairing the inquiry, said the committee aimed to hear from diverse areas across the country to learn how cost of living pressures were impacting everyday Aussies.

“Cost of living is the number one issue facing Australians right now,” she said.

“I want this committee to go right around Australia, to hear from ordinary Australians about how they’re doing, where they’re finding it tough and find practical solutions to Labor’s cost-of-living crisis.”

Cost of living senate inquiry chair Jane Hume says she hopes to find practical solutions to help everyday Aussies with their household budgets. Picture: NewsWire / Sarah Marshall

Menzies MP Keith Wolahan said cost of living was the biggest issue for his community.

“Every day I’m hearing stories about the tough choices families are having to make to manage their household budgets,” he said.

“But while many families are putting grocery items back on the shelves to stick within their tighter budget, this Labor government is not showing the same budgetary restraint.”