Finance Minister Katy Gallagher hopes supermarket giants will start to lower the price of groceries for customers as production costs drop.

Senator Gallagher said while the cost at the checkout has risen due to inflation and supply-chain pressures, supermarkets should pass on savings as inflation starts to ease.

“As those costs moderate, you would hope to see some of the prices moderate,” she told ABC Radio on Thursday.

“As we see those causes of inflation moderate, you would expect to see prices go down.”

The comments come after Coles and Woolworths announced annual profits of more than $1 billion, even after a spike in cost-of-living pressures on households.

But Woolworths chief executive Bradford Banducci said the supermarket chain was working to reduce the cost of products on shelves, denying the company was price-gouging customers.

“Our customers scrutinise our prices every day. It’s one of the most cross-shopped grocery markets in the world,” he told ABC Radio.

“We all are under scrutiny, as we should be …. our customers are very challenging and demanding, as they should be.

“That is the true north for us, and I think that sets the high watermark for what we need to focus on.”

The outgoing head of the Productivity Commission, Michael Brennan, said shoppers could pay higher prices if the Coles and Woolworths duopoly was broken up.

“It’s easy to look at that aggregate and say we need to break that down, we need competition,” he told the National Press Club in Canberra on Wednesday.

“(But) in many cases, consumers feel better off when they’ve got a Coles or Woolies because the prices are cheaper and the range is better.”

– AAP