Coles revealed that the price of its products rose 4.3% over the past financial year as Australia’s cost of living crisis continued to hit consumers.
The supermarket giant revealed in its financial results on Wednesday that the price of its products and its cost of operation were both negatively impacted by inflation in the 2021-22 financial year.
“In July, we saw further inflation in commodity costs due to recent flooding, bakery due to wheat prices, and packaged grocery due to various chain cost increases. procurement, including wages, packaging, raw materials and freight,” Coles said. in a report.
“In line with our suppliers and customers, we are also seeing inflationary pressures impacting our own cost base with rising wages, rent, fuel, supply chain and capital costs.
“Additionally, Covid and the flu have seen increased absenteeism costs for team members continue to impact the business.”
Coles revealed that total supermarket price inflation of 1.7% had been recorded over the past financial year.
But in the fourth quarter, this inflation rose to 4.3%, which was particularly felt with fresh produce.
“In the fourth quarter, new inflation was 4.7% and was driven by both bakery, reflecting higher wheat prices, and fresh produce, due to flooding in Queensland and New -South Wales which has had an impact on supply, particularly in vine and soft vegetables such as tomatoes, peppers and broccoli,” Coles said.
“Raw material, commodity, shipping and fuel costs remained the primary driver of supplier input cost requests received in the fourth quarter, impacting packaged goods inflation. .”
The supermarket giant’s cost of running, as a percentage of sales, rose 50 basis points to 21.4% in the past financial year, partly due to underlying cost inflation.
He noted that one of his biggest challenges in today’s market was rising food inflation, which had led to an increasing number of suppliers raising prices and customers’ “more value-driven choices”. impacted by cost of living pressures.
But in some worrisome news for consumers, Coles signaled his inflation troubles aren’t going to end any time soon.
In his outlook for fiscal 2023, Coles said rising inflation and rising interest rates will continue to put pressure on many households.
He also said inflationary costs, including salaries, rent, fuel, supply chain and capital costs, would impact his cost of doing business.
To counter these issues, Cole said he is focusing on promoting initiatives and exclusive products that will entice customers to shop at his stores.
“With rising inflation and rising interest rates putting pressure on many households, Coles will continue to focus on delivering trusted value to customers through our differentiated Exclusive to Coles range. , our exclusive liquor brands and our Flybuys loyalty program,” he said.
“We have also locked the price of 1,168 products in supermarkets and online until at least January 31, 2023, and started lowering the price of an additional 500 products.”
Coles Group chief executive Steven Cain also said its “smarter selling program” would help reduce inflationary costs of doing business.
“We have now delivered the third year of our transformation strategy, including significant growth in our e-commerce operations coupled with additional efficiencies through our Smarter Selling program,” he said.
“The continued headwind of rising inflation underscores the importance of our Smarter Selling cost reduction program, and the start of commissioning of three of our four Witron automated distribution centers and processing centers Ocado customers in FY24 will allow us to improve future efficiency while delivering an improved offering to inspire customers,” he said.
Coles posted net income of $1.048 billion for the 2021-22 fiscal year, an increase of 4.3% over the previous year.
It also recorded $39.75 billion in annual revenue, a 2% increase from the prior fiscal year.