Australia’s Supermarket Squeeze: Families and Suppliers Wear the Pain While Coles and Woolworths Hold the Power
Australians know the weekly grocery shop has changed — and not for the better.
The trolley that once fed a household for $150 can now push well past $200 without much effort. A few basics, some fruit, meat, bread, milk, cereal, cleaning products, and suddenly the total feels like a small financial event.
This is not just perception. It is backed by the numbers.
According to the Australian Competition and Consumer Commission, grocery prices in Australia rose 24% over the five years to 2025. The ACCC said rising supplier costs were part of the story, but so too were expanding margins among major supermarkets. (reuters.com)
For households already paying more for rent, mortgages, electricity and insurance, food inflation has become one more unavoidable hit.
And at the centre of it all sit Australia’s two supermarket heavyweights — Coles Group and Woolworths Group.
The Checkout Shock Is Real
Australians do not need an economist to tell them groceries cost more. They see it every week.
Official figures from the Australian Bureau of Statistics show food and non-alcoholic beverage prices were still 3.1% higher in the year to February 2026. Some categories rose far faster:
Beef and veal: +13.5%
Lamb and goat: +12.9%
Coffee, tea and cocoa: +11.4%
Meat and seafood overall: +4.5% (abs.gov.au)
So while headline inflation may be easing, the items people actually eat and drink are still marching upward.
That matters because groceries are not discretionary spending. Families can delay a holiday or cancel a streaming service. They cannot cancel dinner.
What It Means for Real Households
A 24% rise in groceries over five years means a household spending $250 a week on food in 2020 could now be spending around $310 for the same basket, before even accounting for brand changes or reduced quality.
That is roughly $3,000 extra per year.
For a family already stretched by mortgage increases or rent hikes, that money has to come from somewhere else:
fewer takeaway meals
cheaper brands
less meat
no treats
postponed bills
less savings
This is why supermarket prices spark such anger. People feel them immediately.
Coles and Woolworths Dominate the Market
Australia’s supermarket sector is heavily concentrated. Coles and Woolworths together hold the majority share of grocery sales nationally, which gives them enormous influence over pricing, promotions and supplier access.
The ACCC’s supermarket inquiry described the sector as highly concentrated and said the major chains hold entrenched positions in many areas. (accc.gov.au)
In plain English: for many suburbs and regional towns, shoppers are choosing between Coles and Woolworths, not between dozens of strong competitors.
That tends to be good for the sellers, less good for everyone else.
Suppliers Are Being Squeezed Too
Households are not the only ones under pressure.
Farmers, growers and food manufacturers have been warning for years that dealing with the major chains can be brutal. If a supplier loses shelf space with Coles or Woolworths, it can be commercially devastating.
The ACCC’s supermarket inquiry found many suppliers felt they had limited bargaining power, with concerns raised around fear of retribution, difficulty negotiating price increases, and dependence on access to major supermarket shelves. (accc.gov.au)
Recent media reporting also highlighted increasing supplier cost pressures tied to freight, wages, energy and packaging, with producers seeking higher wholesale prices to remain viable. (7news.com.au)
That means many producers are trapped in a nasty equation:
input costs rise
supermarkets resist increases
margins shrink
viability suffers
Meanwhile, consumers still face higher shelf prices.
Someone in the middle is doing alright.
The “Specials” Problem
Price pressure becomes even harder to swallow when shoppers question whether discounts are genuine.
The ACCC launched legal proceedings against Coles and Woolworths alleging misleading discount pricing practices affecting hundreds of products. The regulator claimed some items were temporarily increased in price before later being promoted as discounts, potentially misleading consumers about savings. Both companies denied wrongdoing. (reuters.com)
For families relying on specials, that allegation cut deep.
Australians are not chasing yellow tickets for fun. They are trying to save enough money to cover school lunches, petrol or next week’s power bill.
Shoppers Are Adapting
Consumers are responding the only way they can: by becoming tougher, smarter and less loyal.
CHOICE’s June 2025 grocery basket comparison found:
ALDI Australia: $55.34
Coles: $56.75
Woolworths: $57.20
IGA: $65.56 (abc.net.au)
The difference between ALDI and Woolworths in that basket was modest, but over a year it adds up. Across larger family shops, those savings can become significant.
That is why Australians are:
splitting shops across stores
buying more home-brand goods
comparing unit prices
ditching brand loyalty
cutting waste ruthlessly
Why This Debate Is Only Growing
Supermarket pricing has become a political issue because everyone feels it.
When petrol rises, people notice. When power bills rise, they notice later. But when groceries rise, Australians get reminded every single week.
And when two dominant retailers keep holding the best cards in the game, public frustration is inevitable.
The Big Two Keep Getting Bigger
While households trim spending, the major chains continue to generate enormous revenues.
Woolworths Group reported $67.9 billion in sales revenue for FY2024, while Coles Group reported $43.7 billion in revenue for the same period. Both companies also remained profitable despite softer consumer spending conditions. (Company annual reports)
Those figures do not automatically mean wrongdoing. Large businesses make large numbers. But they do highlight why many Australians question whether enough competitive pressure exists when families are cutting basics while supermarket giants still deliver multi-billion-dollar turnovers.
Scale matters. So does market power.
More Price Rises Could Be Coming
The pressure may not be over.
Recent supplier reporting and retailer commentary suggest fresh upward pressure remains in the system, particularly from:
higher transport and logistics costs
wage increases
electricity and refrigeration expenses
insurance premiums
weather damage to crops
global commodity volatility
In April 2026, industry commentary reported Coles, Woolworths and IGA suppliers warning of “hidden cost pressures” that could flow through to shelf prices later this year. (7news.com.au)
For households already stretched thin, the prospect of another round of grocery increases will land badly.
Australians understand that businesses need to make money. They understand droughts, floods, freight costs and global supply shocks.
What they struggle to accept is this:
households are cutting back
suppliers are under pressure
trust in specials is damaged
competition is limited
yet the major players remain dominant
That is why the supermarket squeeze is no longer just about groceries.
It is about fairness — and right now, many Australians believe they are the ones paying for a system that works better for everyone above them in the chain than it does for the people at the checkout.