Why your grocery bill Is outrunning your pay packet
You have known for a while that the weekly shop feels harder than it used to. The numbers now confirm it. Canstar research tracked a standard Woolworths basket. The average bill rose 8.5 per cent in the sixteen months to July 2026, climbing from $213.89 to $232.02. Wages have been growing at just 3.3 per cent annually, according to the Australian Bureau of Statistics. Put simply, groceries have been getting more expensive at close to three times the rate pay packets have been growing. This gap is why households are feel the pain at the checkout.
It isn’t a uniquely Australian problem, but the local numbers do look worse than comparable markets. Over the same period, UK supermarket giant Tesco’s prices actually fell 2.7 per cent, while Woolworths’ own New Zealand arm rose just 2.79 per cent, a fraction of the increase seen here.
Consumer researcher Lisa Asher, who compiled the Canstar analysis, put it plainly: “Wages are not catching up and, as a result, you’re really feeling the pinch when you get to the check-out.”
So, who’s responsible?
The obvious suspect is the concentrated structure of Australian grocery retail market. It’s now backed by regulatory findings. The ACCC’s final report into the supermarket sector, handed down in early 2025, found that Coles and Woolworths together account for roughly two-thirds of grocery sales nationally (Woolworths on 38 per cent, Coles on 29 per cent). ACCC described the market not as a simple duopoly but as an oligopoly, where the major players have little genuine incentive to compete hard on price.
The regulator noted that both chains had “maintained or increased their product margins” even as input costs rose through the cost-of-living crisis, with Woolworths posting a $739 million half-year profit and Coles $576 million. The ACCC stopped short of declaring the two chains guilty of price gouging.
Untangling genuine cost pressure from opportunistic pricing across thousands of products with constantly shifting weekly specials proved very difficult to pin down. (The regulator’s own words.) Charging high prices, however unwelcome, isn’t illegal under Australian competition law.
What the inquiry did flag clearly was the confusing “high-low” promotion cycle that sees products swing between full price and half price week to week, making it hard for shoppers to judge real value, along with a supply chain where smaller producers often have only one or two viable buyers and little leverage to push back. Asher argues the competition shortfall alone adds around 10 per cent to Australian grocery costs and has called for a royal commission into retail competition. Whether the answer is a royal commission, faster action on the ACCC’s twenty recommended reforms or simply more time for smaller chains to gain ground, the debate over how much blame sits with the supermarkets is far from settled.
The squeeze doesn’t stop at the checkout
It’s tempting to assume that if shoppers are paying more, growers must be earning more too. The ACCC’s inquiry found the opposite is often true. Because Coles and Woolworths control such a large share of grocery sales, many farmers effectively have only one or two viable buyers for their produce. That’s a situation the regulator labelled a monopsony, where the buyer holds almost all the leverage.
Victorian fruit grower Peter Hall summed up the frustration bluntly, telling the ACCC he’s receiving less for his produce now than he was five to ten years ago, even as the major chains’ profits have climbed.
Queensland Fruit and Vegetable Growers chief Rachel Chambers pointed to the same imbalance: “He who holds the data holds the power”. Growers, she said, have historically had almost none of it.
Dairy farmers tell a similar story. The Australian Dairy Farmers group flagged one major retailer importing six million kilograms of New Zealand cheese at prices local producers simply can’t match, a reminder that supermarkets can and do overlook domestic growers altogether when it suits their margins. Australian Dairy Farmers president Ben Bennett’s warning was less about the ACCC’s findings than what happens next: without real enforcement power, he said, “our very smart and pretty astute supermarkets will just walk around us, as they have done in the past.” For a lot of growers, that’s the real story behind the headline price rises. It’s not just what households pay, but how little of it makes its way back down the chain to the people who grew the food in the first place.
How families are adapting
Sydneysider Chris Jackson feeding a family of four, says that their weekly grocery budget has crept from $300 to “$400 plus”.
A Finder survey of just over a thousand Australians found 68 per cent have adopted some kind of money-saving strategy at the supermarket. The most common tactics are the least dramatic: 42 per cent have switched to home-brand products, 32 per cent now buy in bulk, and 30 per cent stick to seasonal produce to keep costs down.
Seventeen per cent of those surveyed say they’ve cut meat from their diet altogether, often swapping it for legumes or frozen alternatives, and household budgets are being trimmed of discretionary extras like chocolate and confectionery first.
Some of the coping strategies are less comfortable to read about. Fourteen per cent of those surveyed — roughly three million Australians — admitted to eating expired food to save money, while smaller numbers reported deliberately mis-scanning items at self-checkout or, in rare cases, shoplifting food outright.
As Finder’s Sarah Megginson put it, when people are eating expired food or resorting to theft just to eat, it’s a sign that the cost-of-living crisis has pushed some households into genuine hardship rather than mere belt-tightening.
Shoppers are also getting sharper-eyed about what they’re paying for. Shrinkflation (where pack sizes quietly shrink while prices hold or rise) has become its own point of frustration, with one shopper noting her usual toilet paper had lost two centimetres in width without anyone announcing it. It’s a small detail, but it captures the mood: after several years of rising bills, Australians are no longer taking the price on the shelf at face value.
