Supermarkets Face Prosecution for Price Gouging From July

Sarah picks up a packet of Tim Tams from the shelf at her local Woolworths in Parramatta. The price says $4.90. Six months ago it was $4.50. The packet used to hold eleven biscuits. Now it holds nine. She puts it back, grabs a homebrand version, and moves on. This is how people shop now.

Sarah is not alone. Across the country, millions of households are doing the same mental arithmetic every time they wheel a trolley down an aisle. Is this worth it? Is there a cheaper version? Can I skip it altogether? These are the questions that define grocery shopping in 2026, when the average weekly shop costs $276 for a family of four. That is $56 more than it cost in 2019.

From July 1, 2026, something changes. The Australian Competition and Consumer Commission gains the power to prosecute large supermarket retailers if they charge prices that exceed the cost of supply plus a reasonable margin. It is Australia's first excessive pricing regime for the supermarket sector. And it could not come at a more loaded moment.

What the new rules actually say

The legislation gives the ACCC authority to take action against large retailers in the supermarket sector whose pricing exceeds a benchmark: cost of supply plus a reasonable margin. That sounds simple enough. In practice, defining 'reasonable' will be where every legal fight lands.

Cost of supply includes what the retailer pays for the product, transport, labour, and operating costs. The margin is what they add on top. The law does not specify a percentage. It leaves room for the ACCC to assess whether a particular price, on a particular product, at a particular time, crosses the line into excessive.

These new powers send a clear message to supermarkets: if you are charging more than is fair, we will act. Consumers deserve to know that prices reflect genuine costs, not inflated margins.

— ACCC Deputy Chair Catriona Lowe

The regime applies to large supermarket retailers. The legislation does not catch your local IGA franchisee or the corner milk bar. It targets the Coles and Woolworths operations that control more than 65% of Australia's grocery market.

Why now?

Food prices have not returned to pre-pandemic levels. According to ABS data, the food and non-alcoholic beverages price index rose 31% between December 2019 and December 2025. Wages over the same period rose 19%. That is a gap of twelve percentage points. In dollar terms, a family earning $85,000 before tax is spending roughly $3,400 more per year on groceries than they were six years ago, while their real purchasing power has gone backwards.

The political pressure has been building. Both major parties have faced sustained criticism about cost of living inaction. Public anger has focused particularly on supermarket profits recorded during the pandemic and its aftermath. Woolworths reported $1.62 billion in net profit for FY25. Coles reported $1.1 billion. These are healthy margins in an industry that typically runs thin.

The $1 billion underpayment case against Coles and Woolworths remains unresolved. A Federal Court judge recently described the litigation as 'off the rails' due to excessive lawyer submissions. The case has dragged on for years while prices kept climbing.

Shrinkflation has not stopped

While shoppers wait for the new rules to bite, shrinkflation continues. This is the practice of reducing pack sizes while keeping prices the same, or increasing them only slightly. The effect is a hidden price rise.

One example that has frustrated shoppers: Cadbury Dairy Milk blocks dropped from 200g to 180g in late 2024. The price stayed at $6.50. That is a 10% reduction in product for the same money. The unit price jumped from $3.25 per 100g to $3.61 per 100g. Unless you are reading the fine print on the shelf label, you would never know.

Consumer group Choice has documented dozens of similar cases across bread, cereal, chips, and household cleaning products. The pattern is consistent: less product, same price, no announcement.

Will these rules actually change prices?

That depends on enforcement. The ACCC's new powers are prosecutorial. It can take a retailer to court. But proving that a specific price exceeds 'cost of supply plus a reasonable margin' requires detailed evidence about that retailer's actual costs. Supermarkets are not required to publish their cost structures. They will argue that their margins are reasonable. The ACCC will need to demonstrate otherwise.

The legislation includes penalties, but the maximum fines have not been publicly confirmed. If they follow the pattern of recent competition law amendments, expect figures in the tens of millions for corporations. Whether that is enough to deter a retailer making over a billion dollars a year in profit is another question.

New Zealand's Consumer NZ has cited Australia's upcoming rules as an example of what pricing regulation could look like. New Zealand currently has similar market concentration issues but no excessive pricing ban.

The bigger picture

Groceries are only one pressure point. Households in 2026 are also dealing with energy rebates that have expired, petrol prices climbing toward $2.40 per litre as the Iran crisis disrupts global oil supply, and mortgage repayments that remain elevated despite two rate cuts. The grocery bill sits in a stack of bills that all went up at once.

For a family on $85,000 combined income, the arithmetic looks like this: mortgage repayments up $180 per month since 2022, energy bills up $344 per year since rebates ended, petrol up $80 per month, groceries up $280 per month. That is roughly $760 extra per month. Or $9,120 per year. That is more than a month's after-tax income.

Excessive pricing rules will not fix all of this. But they might fix part of it. And when every dollar counts, part matters.

What you can actually do about this

While the rules take effect in July, you do not have to wait. Here are five things that cost nothing and take five minutes or less.

1. Compare unit prices on shelf labels. Ignore the sticker price. Look at the per-100g or per-litre figure. That is the real price.
2. Switch supermarkets more often. Aldi undercuts majors on staples. IGA sometimes beats them on specials. Do not assume your usual shop is cheapest.
3. Buy homebrand for pantry basics. Canned tomatoes, pasta, rice, flour. The difference is often cents per unit, and quality is identical.
4. Avoid pre-cut, pre-washed, or single-serve packs. You are paying for convenience you can do yourself. A whole broccoli costs less than florets in a bag.
5. Check catalogues before you shop. Specials rotate weekly. Meat, dairy, and cleaning products often cycle between full price and 50% off. Time your purchases.

These are not solutions to a structural problem. But they are adaptations to it. And until the ACCC starts prosecuting, adaptation is what we have.

What happens next

The excessive pricing regime starts July 1, 2026. The ACCC has signalled it will prioritise cases where evidence of margin inflation is clearest. Expect the first enforcement actions to target staple products with stable supply chains and well-documented costs. Bread, milk, eggs. The basics.

Whether this changes behaviour before a single prosecution is filed remains to be seen. Sometimes the threat of action is enough. Sometimes it is not. What is certain is that the conversation has shifted. For the first time, supermarkets face a legal framework designed to check pricing power, not just competition.

Sarah, in Parramatta, will keep doing her mental arithmetic. The nine-biscuit Tim Tams packet will still be on the shelf. But come July, there might be someone asking whether $4.90 for nine biscuits is a reasonable margin, or whether it is something else entirely.