Supermarkets will be put under the spotlight of an inquiry as the consumer watchdog investigates whether customers are paying too much at the checkout.
During a National Press Club speech on Tuesday, Prime Minister Anthony Albanese announced the Australian Competition and Consumer Commission would conduct a year-long probe into the supermarket industry.
The inquiry will focus on the differences between prices paid by major supermarkets for fresh produce from farmers and what customers pay in store.
The supermarket duopoly Coles and Woolworths have been accused of price gouging on fruit, vegetables and meat.
ACCC chair Gina Cass-Gottlieb promised the watchdog would use its full range of legal powers to examine the supermarket sector and carefully consider recommendations to government.
"We know grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures," she said.
"When it comes to fresh produce, we understand that many farmers are concerned about weak correlation between the price they receive for their produce and the price consumers pay at the checkout."
The inquiry will also look at how online shopping and loyalty programs as well as technology are affecting competition in the industry.
Nationals leader David Littleproud accused the government of being "shamed" into calling the inquiry after consumers faced months of pressure.
"The Nationals tried to bring forward the much-needed review more than a year ago and support big stick legislation that included increased penalties and divestiture powers back in 2022, but we were ignored," he said.
"Labor must now get cracking and give farmers and families the answers they need and deserve."
Woolworths chief executive Brad Banducci said the company would assist the ACCC with its inquiry and acknowledged pressures of the food shop on household budgets.
"Food inflation has continued to moderate in recent months and we expect this to continue throughout 2024," he said.
In a statement, Coles said it looked forward to illustrating to the inquiry how it provided value to customers and its positive relationships with suppliers.
"We are working hard to keep groceries affordable for Australian households and families, especially as they face escalating living costs with higher mortgages and rents, and increasing expenses like energy and fuel," the statement said.
"We are doing this against a challenging environment of high inflation, with rising costs that affect the whole economy including farmers, suppliers and retailers, and impact the prices customers pay at the checkout."
Mr Albanese said the government would also give further funding to consumer group Choice to provide information to shoppers on supermarket prices.
Ahead of the Australia Day long weekend, data showed shoppers would face up to a 32 per cent increase in the cost of ingredients for a true blue barbecue.
The research conducted by trading and investment platform eToro found a typical Aussie barbecue meal of meat and prawn skewers alongside burgers, sausages and salad would cost at least $81.89 for a family of four.
The same time last year, this shopping list was estimated to cost $62.26.
Market analyst Josh Gilbert said rising inflation over the past 18 months had taken its toll at the checkout.
"This feels like a sucker punch for the average Australian, especially as decade-high interest rates continue to eat into household budgets," he said.
The watchdog's inquiry follows a review into the food and grocery code of conduct, being overseen by former Labor minister Craig Emerson.
The code of conduct regulates the conduct between supermarkets and suppliers and is voluntary, but the review will look at whether it should be mandatory.
