Woolworths trumpeted eight consecutive quarters of price declines. Here’s why that claim doesn’t pass the pub test
It sounds like great news for households,Average grocery prices have recorded “eight consecutive quarters of year-on-year price declines”, Woolworths declared at its half-year financial results,It’s a big claim given that most shoppers intuitively know that grocery prices have been rising, with data tracked by Savings,com,au showing a trolley load of Woolworths groceries that cost $292 two years ago now costs $315.
Putting promotions to one side, it’s difficult to find many products at Woolworths that are cheaper now than they were eight quarters ago.The price of Weet-Bix (375g) is up 14%; Coca-Cola (1.25 litres) up 13%; Vegemite (150g) up 5%; beef mince (500g) up 30%; and free range eggs (large) are up 19%.Bags of washed potatoes, cheese slices, white sugar and long grain rice were among the few products that Guardian Australia could identify as having stayed the same or recorded price falls during that period.Indeed, the food and non-alcoholic drink category of the consumer price index was one of the largest contributors to annual inflation in 2025, up 3.
4%, according to the Australian Bureau of Statistics.It was also a significant contributor the year before.Interestingly, the ABS uses Woolworths scan data, as well as data from Coles and other retailers, to work out grocery price changes, creating an apparent discrepancy with the supermarket’s claim of falling prices.Given that Woolworths is Australia’s biggest supermarket chain, it has a significant bearing on the ABS calculations.It turns out that when Woolworths says average prices have declined, it does not actually mean that an identical basket of groceries costs less than it used to.
As Graham Cooke, head of consumer research at Finder, puts it: “It is the corporate equivalent of a hotel chain claiming ‘average stay costs’ are dropping because guests have stopped booking suites and are now squeezing into budget rooms.”Woolworths uses the Fisher method, a formula that tracks the average price of items actually sold, not the changes in shelf price.While the methodology is useful for some mathematical problems, the metric will typically show prices are falling when customers are struggling so much that they switch to cheap alternatives.This reframes a decline in living standards as a saving, masking the fact that grocery prices are actually rising, as every shopper knows.“In other words, the Woolworths method accounts for consumer choice,” Cooke says.
“If steak increases by $5 and everyone switches to mince, the average price paid drops.“To announce eight quarters of price declines doesn’t pass the pub test.If prices were truly deflating for the benefit of the customer, profit margins typically wouldn’t be climbing.”A Woolworths spokesperson defended the methodology.“Our measurement of the change in average prices is based on the ongoing shifts in which products customers are actually putting in their baskets day-to-day,” the spokesperson said.
“It is a recognised metric that takes into account the specific volumes of each item sold in Woolworths stores.”The decision by Woolworths to use this statistical model for public price claims will probably frustrate shoppers who have downgraded their family’s dinner menu to stay within a relentlessly tight budget.The “eight consecutive quarters” of price declines claim is also being used at a time of increased scrutiny on the major supermarkets, given Coles has just been in court defending allegations from the consumer regulator that it offered “illusory” price discounts.Woolworths is facing near identical allegations and is due in court later this year.In the meantime, both major supermarket chains have been increasing their profit margins during an inflation spike, an issue that could trigger more political attention.
To truly pay less than two years ago, Woolworths shoppers will need to stick to the actual items that are now cheaper – meaning a family dinner consisting of washed potatoes, cheese slices, white sugar and long grain rice may need to suffice.Jonathan Barrett is Guardian Australia’s business editor
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