Supermarket price wars: Grocery gap widens as Woolworths raises cost of essentials, and Coles, Aldi lower tags

The gap between the cost of grocery essentials at our major supermarkets is widening, with a new survey finding prices at one retailer have grown almost $18 as its prices go up but competitors’ go down.

Undercover shoppers recruited by consumer group Choice found a basket of groceries bought at Woolworths had increased by five per cent since the first quarterly survey. The same basket at Coles and ALDI, meanwhile, had dropped in the latest period.

Choice was commissioned by the federal government to produce a grocery basket mystery shop report every quarter for the next three years in a bid to provide transparency amid allegations of price gouging.

Shoppers perused the aisles at 104 supermarkets across Australia, including ALDI, Coles, Woolworths and IGA, to record the price of 14 common grocery items — 10 packaged items as well as milk, beef mince, apples and carrots.

The average basket of groceries between the four retailers was $66.08, even with weekly specials and catalogue discounts.

ALDI was the only store from which the haul cost less than the national average — $50.79 in the latest survey, down from $51.51 in March. It also held its position as the most affordable supermarket.

Coles’ basket was the second-most affordable, with the basket of essentials costing $66.22 this quarter, down from $68.51 in the last.

The Woolworths basket, however, increased in cost, rising to $68.37 in the latest quarter. Up from $64.93 in March.

“When looking at prices with specials, Woolworths has slipped from second to third place in this wave of research,” Choice chief executive Ashley de Silva said.

The same basket at IGA’s 27 independent supermarkets lagged behind Aldi, Coles and Woolworths, coming in at $78.95. Choice said that price reflects the variations in pricing across the stores of different sizes across the country.

Mr de Silva said the survey results were a reminder that genuine specials can make a world of difference when saving money at the checkout.

He said a discount on tea bags at Coles during the survey period had a “major influence” on its results.

“Buying items on special can make a difference to overall grocery costs, and reinforces the benefits of shopping around where possible,” he added.

“Unfortunately, Choice has previously found supermarket labels are often confusing, making it difficult to tell if there is a true discount on offer or not.”

The sincerity of Woolworths’ and Coles’ discount schemes were brought into question by the consumer watchdog this week, after it lodged twin lawsuits against the supermarkets, accusing them of running shams to dupe customers during the cost-of-living crisis.

The Australian Competition and Consumer Commission (ACCC) alleged the two supermarkets breached consumer law by placing “illusory” discount pricing claims on hundreds of common grocery products.

The allegations centre on Coles’ long-running “Down, Down” campaign and Woolworths’ “Prices Dropped” pitch, which were both promoted as a lifeline to families struggling to make ends meet as inflation pushed up prices on everyday items.

The claims involve 266 products for Woolworths at different times across 20 months, and 245 products for Coles at different times across 15 months, amounting to “tens of millions” in sales from which both chains “derived significant revenue”, the ACCC said.

The watchdog will allege the supermarkets briefly jacked up the price of products at least 15 per cent before slapping on a Prices Dropped and Down Down discount.

That meant the product appeared cheaper when in fact it was more expensive than what it was before the short-term price spike.

The allegations followed a review of the grocery code review that recommended shifting from a voluntary to a mandatory regime and imposing heavy fines of up to $10 million if chains breach business behaviour standards.

Mr de Silva said its latest survey highlights the importance of “clear, simple labelling that leaves the customer in no doubt about whether a product is actually on special”.

The survey also highlights the importance of shopping around at different supermarkets to take advantage of specials on offer.

Choice also recommends shoppers use the unit pricing that is on shelf labels to ensure they are getting the most bang for their buck with their purchases.

It also suggests swapping out more expensive grocery options for cheaper alternatives — choose cheaper cuts of meat, frozen vegetables, and home-brand products.