It has warned that price hikes are “coming now and big” as big supermarkets struggle with suppliers asking for more money.
Coles and Woolworths suppliers are attacking major retailers over multiple price hikes that could increase the cost of products on shelves by a whopping 12 percent this year, new research has found.
Buyers in the US and UK are already being hit by huge price hikes, and Aussies are on the verge of experiencing the same as the cost of living skyrockets to a 22-year high.
Ben Gilbert, a retail analyst at investment bank Jarden, warned that price increases in supermarkets are “coming now and big”.
A survey of 45 Jarden suppliers found they are targeting price increases averaging up to 6.8 percent per year for their products, with 66 percent already implementing the increase while 20 percent are still in negotiations.
“The price increases are significantly larger than we expected,” Mr Gilbert said in his survey of key retail suppliers.
But that’s not the end of soaring food prices.
“Further increases are planned, either a second or a first at a planned weighted rate of 7.4 percent. This paints a scenario where we could see an annualized run rate in excess of 12 percent by 2022,” he said.
In more bad news for Australians, Mr Gilbert said any sales or promotions were likely to drop.
“Although retailers and suppliers are actively running promotions in January, reflecting supply chain issues, not all suppliers are able to run promotions at the same time or plan to scale back promotions,” he said.
“We found that 49 percent expect to reduce promotions, while 11 percent are unsure.”
Fruit and vegetables are expected to be among the items hardest hit by price increases, with some food manufacturers facing cost increases of up to 700 percent.
Soaring supermarket costs are another blow to Australian consumers as they grapple with rising interest rates, increased childcare costs and spikes at the pump.
Some groceries in Australia’s major supermarkets are already up a whopping 94 per cent over the past year, data released last month showed.
Coles has been forced to hike prices on a range of essential items and warned shoppers there could be more price pain in the coming months.
The $25 billion retail conglomerate said it hiked prices an average of 3.3 percent in the March quarter to pass on inflated costs for shipping, fuel, meat and fresh vegetables, but Coles boss Steve Cain said the costs could continue to rise in the months ahead.
Woolworths also saw shelf prices rise 2.7 percent as its chief executive, Natalie Davis, revealed that 160 of its top 200 suppliers have requested an increase in the cost of their product, with suppliers expected to request a further increase over the next 12 months .
The price hike at the two major supermarkets comes in less than the 5.3 per cent inflation for groceries reported by the Australian Bureau of Statistics.
