In recent years, food and beverage prices have reached new heights in Australia. The Consumer Price Index (CPI) for foods and beverages between 2021-2023 (6.6%) was more than double that of the previous two decades (2003-2013, 2.9% and 2013-2023, 2.6%). Inflation varied across product categories, with increases of 10%, 10.7% and 12.2% for staples like grains, milk and dairy, and oils, compared to a 5.6% increase for discretionary foods. A range of factors have driven price increases, from COVID-19 and disease-related supply chain disruptions to climate shocks, weather events, and global conflict. Beyond supply-side factors, some new evidence has also explored how market and commercial factors have influenced food costs. For example, a Canadian study found that local farmers’ markets raised prices less than mainstream grocery stores during the pandemic, even though they faced similar cost increases. This sort of evidence refers to the concept of ‘greedflation’, ‘profiteering’ or ‘price gouging’, with major supermarkets accused of raising prices beyond what would be considered reasonable by the public and governments in countries including Canada, the UK, and Australia, even though Australia’s largest grocery retailers deny this.
Following the Australian Competition Consumer Commission’s (ACCC) Supermarket Inquiry 2024-25, the federal government has released draft legislation to prevent price gouging. This includes proposed mechanisms to monitor price changes by requiring ‘very large retailers’ with revenue over $30 billion (i.e., the two major Australian supermarket retailers) to keep detailed records, with the ACCC able to penalise retailers for breaching the proposed excessive pricing law. Overall, these proposed actions are welcomed, though they could be strengthened. To validate claims of ‘price gouging’, robust data is needed. This could include reporting of product-level price changes across supermarket chains, including key factors leading to changes, and discrepancies between supplier and retail prices. For this purpose, self-reported evidence by retailers is less robust than objectively collected data. To ensure accuracy and transparency, the Australian Government could adapt the existing Australian Bureau of Statistics platform used to monitor CPI, to also monitor food prices or, in alignment with the ACCC recommendations, fund state and territory fair trading bodies to monitor compliance.
For this legislation to be enforced, there must be clear, measurable definitions of ‘excessive pricing’ and ‘normal prices.’ For example, in the US price-gouging laws vary but are often defined as charging 10-25% or more above normal prices (i.e. average prices over time) that are not justified by increased costs. Several state laws also apply explicitly to excessive pricing during emergencies. The proposed legislation could also be strengthened to help ensure fairness and transparency in the major supermarket retailers’ weekly fresh produce tendering processes by adopting recommendations 13-15 of the ACCC supermarkets inquiry. This would involve giving suppliers clearer information on how their prices compare to others and why other suppliers are offering different prices, broken down by region and retailer. Removing the ability of supermarkets to change agreed prices or volumes with suppliers after confirming purchase orders — except in exceptional circumstances like natural disasters, can ensure that supermarkets are not profiting excessively by unfairly reducing the prices paid to suppliers. Together, these recommendations could provide a fairer retail environment for Australian fresh food suppliers and customers.
Prepared by Dr Christina Zorbas and Dr Shaan Naughton on behalf of Deakin University’s Global Centre for Preventive Health and Nutrition (GLOBE) and RE-FRESH: Next Generation
