Coles has issued a grim warning to supermarket shoppers, reporting that increased costs to suppliers will continue to drive up grocery prices.
A day after data shows annual inflation soaring to 5.1 per cent, its highest level in two decades, the retail giant noted in its quarterly results that prices had risen across its supermarket division.
“Inflation steadily increased throughout the third quarter with total supermarkets price inflation of 3.3 per cent, compared to supermarkets price deflation of 0.2 per cent in the second quarter,” the company told the ASX.
Rises had been driven by price hikes across packaged and fresh goods.
“Cost price inflation [is] impacting suppliers as a result of increased raw material, commodity, shipping and fuel costs,” the company said.
Coles said it had added more than 530 products to its “Down Down” promotions in the March quarter – up a third on the prior corresponding period. Prices for more than 1500 Down Down and “everyday low pricing” products had remained unchanged for 12 months.
“Coles Group remains focused on our commitment to deliver trusted value for Australian families amid growing cost-of-living pressures driven by both local and global supply circumstances,” Coles Group chief executive Steven Cain said.
“In particular, we have the widest range of great value and sustainable own brand products in Australia.”
Elsewhere, the company reported sales and revenue had lifted in the first three months of the year as shoppers packed their trollies with more groceries – and alcohol.
The listed company, formerly a part of conglomerate Wesfarmers, reported a 3.9 per cent increase in retail sales in the quarter to $9.3 billion, compared to the same period last year.
Sales revenue rose by 3.6 per cent to $9.1 billion, according to the company’s third-quarter sales results released on Thursday, due to a lift in customer purchases across its supermarket and liquor businesses.
The result came amid extremely volatile trading conditions for retail stores due to the COVID-19 pandemic and widespread flooding.
The Omicron wave greatly disrupted staffing at Coles early in the year, according to its quarterly report.
Pandemic-related costs peaked at about $30 million in January, driven by staff isolation requirements in stores and distribution centres, and costs linked to virus testing.
Despite the disruptions, supermarkets and some other retail companies, including electronics and entertainment suppliers, have made increased sales during the pandemic, lifting their revenue and share prices.
Coles said it was closely managing ongoing disruptions from COVID-19 and floods.
Floods in South Australia earlier this year knocked out a major railway line for several weeks, impacting supply chains and sales at Coles, particularly in Western Australia.
The devastating rain on the east coast then led to the temporary closures of 130 stores in NSW and Queensland.