Cost of living crippling families, says Coles boss

Families are forgoing fresh food as rising energy bills and stagnant wages sap their buying power, says Coles boss.

Coles managing director John Durkan.

The boss of Coles says families are forgoing fresh food and meat in favour of cheaper groceries as skyrocketing energy bills and stagnant wages sap their buying power, suggesting politicians still have “a way to go” to understand their predicament.

John Durkan, releasing new research showing lower-income and regional households were bearing the brunt of cost of living increases, said Australia wasn’t immune to the rising tide of populism engulfing the Western world.

“(It) is yet to become entrenched in our country but there is absolutely no room for complacency,” he warned in a speech.

“This is the toughest time I’ve seen in terms of low wage growth — (it’s) virtually zero while we’re seeing extreme price increases in some other areas like education, utilities and childcare,” he said at an American Chamber of Commerce lunch in Sydney yesterday.

“There is a sizeable proportion of consumers being forced to ­devote time and effort each week to work out how they can afford to buy the essential groceries they need to feed their families. At Coles we are seeing shifts in consumption from premium to mid-tier products, and, for many, shifts to our value range of products.”

Mr Durkan also lashed out at foreign suppliers, such as Mars, Heinz and Coca-Cola, for selling their goods to Coles at far higher prices than they did to other countries. “I don’t understand, when it’s made in the same factory, across the world; yes, the shipping will cost a bit more for Australia, but the rest doesn’t cost much more,” he said, adding it was an “emotive” issue that needed attention. “Around the world there has been a rising tide of populism ­fuelled by a lack of trust in the system — as those left behind express concerns through the ballot box about stagnant incomes, widening inequality and disappearing jobs,’’ Mr Durkan said.

Households in the bottom fifth of income distribution had experienced average cost of living ­increases of 8 per cent since 2011, compared with 6.2 per cent for those in the top fifth, the research, conducted by NERA, showed.

Cost of living pressures had grown across all regions, but pressures had been relatively higher in several regional areas and within particular states, including South Australia, Tasmania, Queensland and Victoria. In major metropolitan centres, they tended to be greatest in outer-metropolitan areas such as Fairfield in Sydney, Dandenong in Melbourne and Salisbury in Adelaide.

Mr Durkan said Coles believed many households were being forced to opt for cheaper packaged food as they coped with mounting bills.

“While this trend is occurring across most of our stores, it is particularly pronounced in stores ­located in the local government areas which have seen the highest cost of living increases,’’ he said.

“We should be concerned that many households feeling cost of living pressures are spending less on fresh produce and fresh meat. In essence, these households are being forced to trade off healthier options for their families.”

Coles, which has 105,000 employees, has recently directed close to an extra $200 million into lower prices for customers.

“Coles has delivered 25 consecutive quarters of food and ­liquor price deflation in our stores and we are proud of that consistent effort,” Mr Durkan  said.

Coles’s foray into an increasingly fractious inequality debate followed a speech by Treasurer Scott Morrison in Adelaide that hit back at a Labor claim that inequality was rising, arguing that Opposition Leader Bill Shorten was stoking “envy politics”.