I guess the interest in this for traders of Australian financial markets (not to mention those trashing the share price of the two supermarket chains) is it may end up trimming inflation. That's me thinking out loud, we'll see.
Australia's consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has accused Australia's two largest (by far) supermarket chains of misleading Australians on pricing of many products:
- "in the case of these products, we allege the new ‘Prices Dropped’ and ‘Down Down’ promotional prices were actually higher than, or the same as, the previous regular price. “We allege that each of Woolworths and Coles breached the Australian Consumer Law by making misleading claims about discounts, when the discounts were, in fact, illusory. “We also allege that in many cases both Woolworths and Coles had already planned to later place the products on a ‘Prices Dropped’ or ‘Down Down’ promotion before the price spike, and implemented the temporary price spike for the purpose of establishing a higher ‘was’ price."
We'll see how this pans out. Conduct does not have to be misleading or deceptive, it merely has to be likely to mislead or deceive. I'd suggest the supermarkets will be buried on this.
Lower inflation would bring forward Reserve Bank of Australia rate cuts. Markets are currently pricing a Q1 2025 rate cut from the Bank.
