Supermarket giant Coles has been accused of failing customers after it admitted to increasing prices for goods it had promised were on lock.

The grocery chain has issued an apology and will refund thousands of customers after what it called an “error” that hiked prices for 20 items.

But consumer group Choice said the compensation came only after it complained to the consumer watchdog about the prices.

Deputy director of campaigns Andrew Kelly said Coles’ failure to keep its pricing promises was “unacceptable” amid the cost-of-living crisis.

“This kind of behaviour from Coles is exactly why we gave them a Shonky Award earlier this year,” he said on Friday.

“Coles has been touting how they’re supposedly helping with the cost of living crisis, all while banking huge profits and not following through on pricing promises made to their customers.”

Coles shared its 2023 Shonky with rival Woolworths, after Choice declared the supermarket duoply had “cashed in during a cost-of-living crisis”.

Earlier this year, Coles promised to “lock” the prices on a range of popular goods as part of a marketing bid to entice cash-strapped families.

But a spokesperson for the supermarket said the ticket prices on some of those items were inadvertently hiked before the lock period ended.

“We know cost of living is the biggest focus for so many of our customers,” the spokesperson said.

“We sincerely apologise to our customers for this mistake and we are working quickly to make it right.”

One example cited by Choice was barbecue briquettes, which were $10 under the locked price promotion in February. They rose to $10.60 by October 14 – two full weeks before the deal was due to expire.

“If Choice hadn’t picked up on this significant error, it’s possible thousands of people would still be out of pocket without even realising,” Kelly said.

“Choice will continue to call out retailers who do the wrong thing by consumers, and other supermarkets should be on notice that they will not get away with any kind of bad behaviour.”

Coles said it had restored the promotional price on eight of the 20 items and was working to fix the other 12.

Refunds have already been processed for customers who used their Flybuys cards or bought their products online. Other customers will need to visit a store with a receipt, Coles said.

“We ask any customer who purchased these items in store to visit our service desk with receipt for a full refund,” a spokesperson said.

Coles and Woolworths have both copped significant public scrutiny over their prices in the past year after several years of high inflation rates.

Coles booked a $1.1 billion annual after tax profit last financial year, up 4.8 per cent on a cash basis. But profits actually fell slightly across its supermarket division, with the group-wide profit entirely down to a $53 million gain posted by its sold-off convenience arm.

Nevertheless, both big retailers will face political scrutiny in early 2024 at a Senate inquiry into supermarket price-gouging.

That probe will examine the extent to which a lack of competition in the industry has driven up prices for consumers and whether supermarket profit margins in Australia are materially higher than they are overseas.