Australian farmers have reacted furiously to suggestions major supermarkets are set to post super profits because they have the power to pass on soaring costs to consumers as experts reveal evidence of price gouging on essentials.
Major retailers, including supermarket giants Coles and Woolworths, are preparing to announce their profits for the 2021-22 financial year and market analysts expect them to post billion-dollar gains even as the skyrocketing cost of living bites consumers.
Stock market analyst Johannes Faul told the AFR that supermarkets’ ability to raise prices as needed meant profits would at least remain ‘steady’.
New analysis has predicted consumers will give up on luxuries and focus on essentials as the cost of living crisis bites, accepting high supermarket prices and allowing the big retailers to maintain profits (pictured are stallholders from Paddy’s Market, which often have lower prices than supermarkets)
Australian farmers have reacted furiously to suggestions that rising inflation could boost supermarket profits because they can pass rising costs onto shoppers (pictured is NSW farmer Chris Stillard and his son)
Another analyst, Craig Stafford, said supermarkets were ‘in good shape’ as inflation feeds into higher prices for consumers.
The profit predictions come as an independent finance sector analyst told Daily Mail Australia there ‘appears to be evidence of price gouging’ in supermarkets and called on the ACCC to investigate.
Guy Gaeta, a cherry farmer from Orange, told Daily Mail Australia the idea that supermarkets could get richer amid high inflation while families and battlers are forced to cut back ‘really pisses me off’.
‘You can’t use inflation as a reason to make money, it’s shocking. They’re ruthless,’ he said.
Mr Stillard claimed inflation is the perfect excuse to get supermarkets ‘off the hook’
Guy Gaeta, a cherry farmer from Orange, told Daily Mail Australia the idea that supermarkets could ‘get richer’ because of high inflation while families and battlers are forced to cut back ‘really pisses me off’
‘Sure, everyone is paying more for extra costs, like with fuel. But when you say “well, we’ve got seven per cent inflation, so we’ll just bump up prices 10 per cent”, that’s just price gouging isn’t it?
‘It’s easy money for them, they must want to buy more Ferraris – it’s just a rip off.
‘I don’t think it’s a fair business you’re profiteering from people because of inflation. I thought no-one makes money out of inflation?’
Martin North, a finance sector analyst with Digital Finance Analytics, said his company’s consumer surveys show supermarket prices have jumped ’20 per cent or more, way above CPI’ in some cases.
Farmer Chris Stillard lamented that there is no mechanism in Australia to prosecute price gouging (Pictured Mr Stillard with his family)
Supermarkets price rises are too high and do not match the extra input costs they pay because of inflation, critics say
He claimed the increase in prices paid at the checkout was larger than the increases in ‘input costs’ paid by supermarkets.
‘If you look carefully, its clear to me that these companies are taking the opportunity to bulk up and safeguard their profits to shareholders by adding more than the (rise in) input costs to their prices. In other words, firms can lift prices to protect margins, at the expense of consumers.’
Mr North claimed price-gouging was happening in ‘the supermarket sector, oil industry and gas industry’.
‘There appears to be evidence of price gouging, at a time when consumers cannot afford to pay more than they should,’ he said.
A confronting graph has illustrated the alarming rise in the cost of basic groceries, with vegetables, cereal and other household staples at the top of the list of steep price rises
Martin North of Digital Finance Analytics claimed predictions of buoyant supermarket profits pointed to a wider problem with ‘corporate ethics’
Another New South Wales farmer, Chris Stillard, who grows persimmons near the Victorian border, said the supermarkets’ confidence in future profits did not surprise him.
‘I’m no economist, I’m a farmer, but maybe that’s what you get when you have two supermarkets controlling 70 per cent of the market,’ he said.
‘When there’s a perfect excuse like inflation, it gets supermarkets off the hook.’
Mr Stillard claimed consistent price rises on all lines of produce should never happen. He said whenever lines of produce are in oversupply – such as apples, because China stopped importing them – prices should fall to reflect that.
‘Australia doesn’t have any laws to prosecute price gouging. It’s blue murder,’ he said.
He said consumers should not ‘just cop’ high prices: ‘Go and shop around.’
Last month, Daily Mail Australia proved that, on at least one day, the cost of shopping at a supermarket giant was dramatically more expensive than a fruit and veg market.
Farmer Guy Gaeta has suggested a boycott of major supermarkets because he says they rip off consumers and farmers (Pictured, from left, Guy Gaeta with wife Simonetta and son Michael)
Australia-wide the cost of meat and seafood was up 6.3 per cent in the last year
Daily Mail bought a week’s worth of fruit, vegetables and eggs from Woolworths and from Paddy’s Market in western Sydney – using an identical shopping list and buying the same weights – and the supermarket giant was nearly twice as expensive.
Coles told Daily Mail Australia: ‘At Coles, our key focus is on keeping the cost of the family shop down and delivering great value to our customers. Since January, we have reduced prices on over 1,000 items across our range of more than 20,000 products.’
The price difference of $49.75 represented a saving of 45 per cent on the Woolworths haul, with the grower’s market cheaper on all but one of the 19 lines purchased.
Woolworths said: ‘Managing industry-wide inflationary pressures will continue to be the focus for us as we work hard to provide customers with great value in partnership with our suppliers through programs like Prices Dropped for Winter and Price Freeze, as well as the thousands of weekly specials.’
The price of vegetables, fruit, breakfast cereals, meat, bread, eggs, oils, butter and margarines all jumped sharply in price in the last year according to the Australian Bureau of Statistics (ABS).
The ABS released its quarterly Consumer Price Index (CPI) figures – the key measure of inflation – last week, showing a 6.1 per cent jump over the last year.
The biggest jump in an everyday grocery items was the cost of vegies, up 7.3 per cent in the last year, mostly attributed to the continued flooding in southeast Queensland and New South Wales.
Coles told Daily Mail Australia its prices are determined by ‘supply and demand’ and that ‘our team is working hard to get prices down’
Woolworths said it is ‘always working to strike the right balance so suppliers receive a fair market price and our customers’
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