Supermarkets 'ripped off ordinary people': Allan Fels

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Too much power, suspect pricing, and loopholes in government policy. A damning new report confirms that some of Australia's largest companies have contributed to high inflation through a variety of dodgy practices.

While households battled soaring grocery costs last year, the two supermarket giants Coles and Woolies raked in the cash, both recording profits in excess of $1 billion in 2023.

But an investigation by the Australian Council of Trade Unions (ACTU) shows the supermarkets are far from alone when it comes to squeezing consumers.

woolworths coles price gouging report

The report, compiled by Professor Allan Fels, former head of the ACCC, found some banks, airlines, and energy retailers are among the conga line of corporations employing "pricing practices that rip off ordinary people".

Fels' report lays bare the remarkable price hikes that consumers had to wear for key goods and services between March 2021 and September 2023.

The price of fuel jumped 45%, electricity rose more than 22.3%, and prices for essential groceries skyrocketed by over 20%.

According to the report, three main factors have allowed some of our biggest corporations to price gouge consumers:

  1. Excess power over customers, supply chains, and workers. ‚Äč
  2. The use of dodgy price practices such as "excuse-flation", where general inflation is used to camouflage higher prices without justification.
  3. A lack of competition or regulation in certain sectors.

ACTU Secretary Sally McManus, says the report confirms "what working people suspected" - that some big businesses have actually added to high inflation.

"This needs to be reined in," she urges.

McManus adds, "The gaming of the system in the wholesale energy market is particularly concerning. Action here could have an immediate effect on our cost of living."

In his address to the National Press Club, Professor Fels acknowledged that a significant part of the cost-of-living crisis has been caused by companies taking advantage of their market power, and relying on gaps in government policy to "squeeze consumers, and often suppliers, to breaking point".

He says, "Reform to curb this is urgent."

The report includes 35 recommendations for the Government to consider, which could help swing the pricing pendulum back in consumers' favour.

For tips on navigating grocery shopping during high inflation, pick up the February issue of Money or order yours online.

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A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.
Comments
Lisa R.
February 10, 2024 9.11am

Another even more concerning and significant contributing factor for inflated pricing and price gouging which has been rising ever since the beginning of the COVID-19 pandemic and even more widely spread now which appears to be going under the radar by the news headlines and regulators is the widespread unregulated practice of the use of artificial intelligence (AI) and machine learning (ML) algorithms to drive dynamic pricing on most goods and services across most industries (locally and globally), with major impacts to consumers and humanity which still remains completely unregulated and unprotected - there are currently no laws currently governing this practice across goods and services, including: groceries (supermarkets), insurance, airlines, real estate, and across all industries. Even the majority of the stock/share markets globally use AI and ML with complex algorithms that drive share prices.

Maurice O'Reilly
February 11, 2024 9.21pm

The prices indicated does not actually show what the consumer pays at the check out point/I used to buy bread for $1 but the price now is $1.90/Butter in this period cost $4.50 now it is $6,50/Every conceivable supermarket item has seen a dramatic price increase so I differ from the prices quoted/The price of petrol is a joke/Overnight the price can rise as much as 40 cents a litre and there seems to be no end in sight for the petrol pump user from the greed of these companies/Overall this spineless Government seems to be bereft of ideas as to how to curb the rapacity of these large providers/Australia a lucky country/I must be kidding myself/The supermarkets are now employing a new tactic/ DECREASING the size of the product but charging at the old weight price/Pensioners are being crushed and Australia is on the road to creating a society of HAVES and HAVE NOTS/I challenge any one reading my response to counter all the points raised

Merrilyn Tattersall
February 14, 2024 1.06pm

"Recommendations" are not going to change a damn thing! These ***s will continue to do what they have always done without any real consequences

John Dzwon
February 20, 2024 12.25am

The COVID pandemic made corpulent corporations realise that they can charge what they like with impunity.

Inflation doesn't happen by magic. Prices go up because big corporations choose to increase prices, and smaller businesses reliant on them are forced to follow suit. IMO, this is the dark side of capitalism, and it's getting darker.