Price watch

Updated 8 May 2026

Why are groceries so expensive in Australia?

Grocery prices are up 24% in five years. The data shows why and what you can actually do about it.

The core problem: wages haven't kept up

Australians have gotten pay rises over the past five years. But not enough. Real wages have barely moved. Meanwhile, food prices have raced ahead. That gap is real money. It's the reason more families are skipping meals or choosing cheaper, less nutritious food.

About 1 in 3 Australian households are now food insecure, according to Foodbank's 2025 data. That means people are going without, cutting back, or making hard choices about what to eat. This isn't a niche problem anymore.

The Coles and Woolworths duopoly

Two companies control about 65% of Australia's grocery market. That's Coles and Woolworths. When two players dominate, competition softens. Prices can drift up without much pushback. Smaller competitors like ALDI and Harris Farm put some pressure on, but they're fighting an uphill battle on shelf space and supply chain scale.

The ACCC spent years looking at this problem. Their supermarkets inquiry found that the big two have significant market power. And even when they talk about discounts or deals, the real price hasn't moved much.

Hi-lo pricing is hiding the real inflation

Here's something most people don't realise: grocery stores use hi-lo pricing. That means they mark things up high, then run promotions to make it look like you're getting a deal.

The data shows it clearly. At Coles, 42.3% of products swing 15% or more on a repeating cycle. At Woolworths, it's 35.3% (Pinch first-party data, May 2026). These aren't random swings. You might see milk at $3.80 one week and $4.50 the next. That's hi-lo. It makes it hard to know the real price. And it makes inflation feel faster than the official numbers suggest.

Why the official inflation numbers don't feel right

The ABS measures food inflation as part of CPI. But families experience something different at the checkout. CPI is an average across the whole basket. Some things have barely moved. Others have jumped 40% or more. If you buy the stuff that's up, you feel it. The official number hides that reality. It's accurate, but it's not personal. Your grocery bill is personal.

Supply chain, margins, and market power

Costs have gone up for retailers. Freight is more expensive. Labour is more expensive. Packaging is more expensive. Some of that gets passed to you. That's normal.

But the ACCC found that some of the price rise reflects increased retail margins. In a truly competitive market, retailers would absorb more of those cost pressures. When competition is limited, they don't have to.

The July 2026 price gouging ban

From 1 July 2026, supermarket price gouging becomes unlawful in Australia. It stops retailers from charging unfair prices on essential goods. It's a signal. But it doesn't address the everyday problem of hi-lo pricing and gradual price creep. The ban is about extremes, not the routine.

For more on what the ban covers: price gouging ban explained.

What you can actually do about it

You can't change the duopoly overnight. But you can change how you shop.

First, know the real price. Don't assume a price is cheap just because there's a discount tag. Look at the history. Is this item genuinely low, or just cycling?

Second, use price tracking to find patterns. Milk swings on a four-week cycle. Butter swings differently. Once you see it, you can time your buys.

Third, shop around. ALDI is genuinely cheaper on many staples. Harris Farm has competitive produce. Woolies and Coles both have genuine deals if you know when to look.

Fourth, swap expensive brands for home brand. Quality is often identical. Price is 30-50% lower.

Fifth, know the unit price, not the package price. A bigger box isn't always cheaper.