Grocery prices may increase by 20 per cent as supermarkets struggle to cope with a surge in demand due to the coronavirus pandemic, an economist has warned.
Some independent stores are already charging up to $50 for toilet paper and $44 for hand sanitiser as panic buying grips the nation.
Significant price increases are yet to hit Coles and Wooloworths – but economists have warned they may be necessary to keep the shelves stocked.
Dr Andrew Hughes from the ANU College of Business and Economics told Daily Mail Australia the hoarding crisis is far from over and could prompt price hikes.
‘It’s only going to get worse, the next six months will be terrible to be honest with you,’ he said.
Left: Priceline in Sydney CBD sells hand sanitiser for $44.95 a bottle. Right: An IGA in Doonside sells an eight-pack of loo paper for $49.95
Woolworths in Double Bay is is left empty after people resorted to panic buying
‘Coles and Woolworths are unlikely to hike prices hugely because they will be accused of trying to take advantage of the situation,’ he said.
‘But it is possible that we could see increases of around 20 per cent for some high demand products such as pasta and rice.’
‘We are likely to see less discounting and more full-pricing so we’ll be paying the recommended retail price for our products rather than the discounted rate.’
A 20 per cent rise would mean a 500g pack of Woolworths Essentials Penne Pasta would increase from $0.90 to $1.08.
UNSW Associate Professor Chung-Li Tseng told Daily Mail Australia we could see price rises if the major supermarkets suffer a labor shortage with workers choosing to stay home or falling sick.
Coles has already announced it is trying to hire 5,000 new workers and will fast track their inductions.
‘If there is a labour shortage then prices may rise because wages may have to increase and the handling and shipping costs will be more.
‘That would give the supermarkets a justification to raise prices,’ he said.
Shelves have been left bare as people stock up amid panic over the coronavirus outbreak
Australian supermarket chains have announced special shopping hours for the elderly. Pictured: Woolworths in Sunbury, Melbourne
Shoppers at Woolworths stock up on long-life goods and panic buying grips Australia
Asked if raising prices could slow the panic buying, he said there was no shortage of food in Australia and that price rises may make the problem worse.
‘Panic has to be addressed by information. Raising the prices may increase the panic further. The best way to tackle this problem is to maintain a normal system as much as possible.’
Dr Hughes said the competition watchdog ACCC will be watching very closely to make sure any price rises are fair and proportionate.
‘If supermarkets increase prices temporarily due to demand then that’s fine, the ACCC won’t have an issue with that,’ he said.
But Dr Hughes said a fairer solution than increasing prices would be to implement rationing.
‘If I were the big supermarkets I would make customers buy items online only. This way you could easily track what households are ordering and only allow people to buy a certain amount, depending on the size of their family.
‘That way, we could make sure everyone has access to everything they need at a fair price and the manufacturers will know how much they need to produce.’
In Denmark a crafty solution to panic buying has gone viral online. One store owner decided to charge $10 for one bottle of hand sanitiser and $200 for two.
He said the elderly, who may not use the internet, and the vulnerable should still be allowed access to supermarkets at certain times.
‘Alternatively, you could issue ration cards like like we did in WWII, just for a short period until normality resumes.
‘We have seen rationing work in Australia recently when supermarkets asked people to show their driving licenses to buy baby formula last year,’ he said.
‘Supermarket business models are designed for rational purchasing. Panic buying is causing a massive spike in demand and the supply chain can’t cope.’
Professor Chung-Li Tseng agreed that rationing could help. ‘Rationing is certainly necessary to some extent,’ he said.
Daily Mail Australia has contacted Woolworths and Coles for comment.
In Denmark a crafty solution to panic buying has gone viral online. One store owner decided to charge $10 for one bottle of hand sanitizer and $200 for two.