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Supermarkets embrace price locks, but how long will it last?

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Retail analysts are tipping conditions will deteriorate for businesses, which sell their produce to the big supermarkets, as they tackle rising cost pressures and tightening margins. Pressure from these suppliers, could spell an end to product promotions and force the hand of big supermarkets on pushing through price increases.

A survey of 56 consumer goods makers by investment bank Jarden, carried out last month, revealed close to three quarters of the suppliers surveyed wanted to raise prices in 2022.

“This would suggest inflation will continue to accelerate in the coming months,” analyst Ben Gilbert wrote in a note to clients.

Retail expert and QUT professor Gary Mortimer said the prevailing market conditions put the major supermarkets in a difficult spot, as they manage their bottomline while providing relief to their customers.

Delivery price consistency, according to Mortimer, was an important tool for supermarkets during inflationary times, especially as discounting becomes more difficult.

“Consumers are certainly attracted to a supermarket that can hold prices at a consistent level for a period of time, particularly if it’s those core products that people buy,” he said.

Coles’ shares closed the session 1.35 per cent stronger at $16.52, while Woolworths was 1.5 per cent higher to $33.99.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.



Retail analysts are tipping conditions will deteriorate for businesses, which sell their produce to the big supermarkets, as they tackle rising cost pressures and tightening margins. Pressure from these suppliers, could spell an end to product promotions and force the hand of big supermarkets on pushing through price increases.

A survey of 56 consumer goods makers by investment bank Jarden, carried out last month, revealed close to three quarters of the suppliers surveyed wanted to raise prices in 2022.

“This would suggest inflation will continue to accelerate in the coming months,” analyst Ben Gilbert wrote in a note to clients.

Retail expert and QUT professor Gary Mortimer said the prevailing market conditions put the major supermarkets in a difficult spot, as they manage their bottomline while providing relief to their customers.

Delivery price consistency, according to Mortimer, was an important tool for supermarkets during inflationary times, especially as discounting becomes more difficult.

“Consumers are certainly attracted to a supermarket that can hold prices at a consistent level for a period of time, particularly if it’s those core products that people buy,” he said.

Coles’ shares closed the session 1.35 per cent stronger at $16.52, while Woolworths was 1.5 per cent higher to $33.99.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.

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