Thursday 2 June 2022 01:46 AM Coles issues an urgent warning to Australian shoppers trends now
Coles boss Steve Cain has revealed supermarkets are being forced to rapidly jack up their prices as food suppliers struggling with production costs demand fee rises.
Over the past 12 months, Mr Cain has witnessed a drastic increase in the number of suppliers knocking on his door to discuss pricing.
'As I sit here today, we have got five times as many requests for price increases as we had last year. Five times,' Mr Cain said, speaking at The Australian's Global Food Forum on Wednesday.
'And they’re not small amounts. It’s not 2 per cent or 3 per cent being asked for either so there is, you know, the usual "pig in the python" trying to work its way through the system, whether things plateau or whether they come down slowly remains to be seen.'
Mr Cain's comments reveal the supermarket industry's difficult balancing act between maintaining the economic sustainability of suppliers, providing affordable food to shoppers and maintaining a profit margin for shareholders.
But as the Russian-Ukraine War and Covid pandemic hamper global supply chains and crops remain scarce due to the NSW-Queensland floods, food producers are facing increased fees.
Shoppers have been facing increased prices at supermarket checkouts amid skyrocketing inflation
Woolworths boss Brad Banducci earlier this year also revealed the company had already seen price boosts of 2 to 3 per cent, with more supplier fee increases expected soon.
As fresh produce prices outstrip dry and packaged consumables, Mr Cain predicts budget-conscious shoppers will be forced to live off traditionally cheaper canned or frozen food.
He also foreshadowed that Aussies will stop eating out at restaurants in favour of cooking at home, with sales of long-lasting food items set to lift.
While the floods in northern NSW and southern Queensland have ravaged many vegetable and fruit farms, Mr Cain said lettuce and truss tomatoes were particularly difficult to get.
In contrast, he said bananas and grapes are in more plentiful supply and the prices are down compared with last year.
Mr Cain said his industry was also struggling with labour shortages as employees take higher paying roles elsewhere and Covid-19 and the flu thins staff rosters, with Coles workers taking leave at double the normal rate.
However, he said the labour crisis was not responsible for the currently high prices, but the knock-on effects would 'flow through the system' and become apparent 'over the next 12 months'.
Coles CEO Steve Cain (pictured) said supermarkets are being forced to rise prices as suppliers call for cost increases
However, Mr Cain said there was some good news for consumers, with prices across the meat industry set to soften and frozen food stocks back up after being depleted amid the pandemic.
The dire warning comes after the nation’s peak body for food and grocery manufacturers announced costs have increased 700 per cent since the pandemic, which would partially be passed on to customers.
'It has now gotten to a point where the level of costs coming through now are just astronomical and businesses really are not able to contain that themselves anymore and are in negotiations with retailers to pass some of that through,' Australian Food and Grocery Council chief executive Tanya Barden said.
On Wednesday, Treasurer Jim Chalmers warned inflation was set to skyrocket in coming months, with the Reserve Bank of Australia expected to inflict five more interest rate increases before the end of 2022 in a bid to slow prices.
Mr Cain predicts shoppers will opt for frozen and canned food as fresh food prices go up
The March quarter national accounts showed the economy grew by 0.8 per cent, a marked slowdown from the upwardly revised 3.6 per cent increase in the December quarter when the Delta variant lockdowns ended.
A cost of living relief package that goes beyond the current measures will be unveiled in Labor's first budget in October.
Reductions to the fuel excise, tax cuts and welfare prop ups unveiled in the last coalition budget in March are all due to end in the coming months.
Mr Chalmers says the new government is being upfront with people about the cost of living crisis, as he continues discussions with cabinet ministers and the energy sector about how to respond to increasing energy costs.
'Our job as the new government, and my job in the October budget, will be to bring down a cost of living package that encompasses areas like child care, like cheaper medicines, like our efforts to get power bills down,' he told the Nine Network on Thursday.
Mr Chalmers says it would be hard to find the
