Sounds like great news for households.
Average food product prices have recorded “eight consecutive quarters of year-on-year declines”, Woolworths said in its recent 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 that a trolley full of groceries from Woolworths that cost $292 two years ago now costs $315.
Promotions aside, it’s hard to find many products at Woolworths that are cheaper now than they were eight quarters ago.
Weet-Bix (375g) price has risen by 14%; Coca-Cola (1.25 l) rose 13%; Vegemite (150 g) up to 5%; minced meat (500 g) up to 30%; and free-range (large) eggs increased by 19%.
Bags of washed potatoes, cheese slices, white sugar and long grain rice were among the few products Guardian Australia could identify that stayed the same or saw price declines during that period.
In fact, the food and non-alcoholic beverage category of the consumer price index was one of the biggest contributors to annual inflation in 2025, rising 3.4%, according to the Australian Bureau of Statistics (ABS). He was also a significant contributor the year before.
Interestingly, the ABS uses scanning data from Woolworths, as well as data from Coles and other retailers, to calculate changes in grocery prices, creating an apparent discrepancy with the supermarket’s claim about falling prices.
As Woolworths is Australia’s largest supermarket chain, it has a significant influence on ABS calculations.
It turns out that when Woolworths says average prices have decreased, it doesn’t actually mean that an identical basket of groceries costs less than before.
As Graham Cooke, Finder’s head of consumer research, puts it: “It’s the corporate equivalent of a hotel chain claiming that ‘average stay costs’ are falling because guests have stopped booking suites and are now squeezing into economy rooms.”
Woolworths uses the Fisher method, a formula that tracks the average price of items actually sold, not changes in sales price.
While the methodology is useful for some mathematical problems, the metric will generally show that prices are falling when customers are struggling so much that they switch to cheap alternatives.
This reframes falling living standards as savings, masking the fact that food prices are actually rising, as every shopper knows.
“In other words, the Woolworths method takes consumer choice into account. If steak goes up by $5 and everyone switches to ground beef, the average price paid goes down,” Cooke says.
“Announcing eight quarters of price declines does not pass the pub test. If prices were truly being deflated to the customer’s benefit, profit margins would not normally increase.”
A Woolworths spokesperson defended the methodology.
“Our measurement of change in average prices is based on ongoing changes in the products that customers actually put in their baskets on a day-to-day basis,” the spokesperson said.
“It is a recognized metric that takes into account the specific volumes of each item sold in Woolworths stores.”
Woolworths’ decision to use this statistical model for public price statements is likely to frustrate shoppers who have marked down the family dinner menu to stay within a relentlessly tight budget.
The claim of “eight consecutive quarters” of price falls is also being used at a time of increased scrutiny on major supermarkets, as Coles has just appeared in court defending allegations from the consumer regulator that it offered “illusory” price discounts.
Woolworths faces almost identical allegations and is due to appear in court later this year.
Meanwhile, the two major supermarket chains have been increasing their profit margins during a rise in inflation, an issue that could generate more political attention.
To actually pay less than two years ago, Woolworths shoppers will have to stick to the actual items that are now cheaper, meaning a family dinner consisting of washed potatoes, slices of cheese, white sugar and long grain rice may suffice.
