Australia’s largest three supermarket players - Coles, Woolworths and Aldi - are amongst the most profitable supermarkets in the world. Over the past few years, increased scrutiny has been applied to supermarkets' practices, such as not-so-special specials and unreasonable price spikes on certain items.

This week, price gouging rules have been introduced by the Federal Government - and in today’s newsletter, we examine what will actually change after July 1 next year.

The government will hand down its mid-year budget update today. 

We know, we know. It sounds boring. But stay with us. 

Known more formally as the Mid-Year Economic and Fiscal Outlook (MYEFO) 2025-26, this paper provides an update on the economy halfway through the financial year. 

Let’s dive in to see what it says.

What is the MYEFO? (Another acronym?)

You can think of MYEFO as a ‘check in’ on how the country’s budget is going. Essentially it’s looking at what the government said it would spend, versus what it has actually spent six months in. 

On top of this, it looks at how the economy is tracking more broadly.

What’s in this one?

Great question. Here’s a quick overview.

May budget’s deficit: This year’s May budget forecasted a deficit of $42 billion for 2025-26. That means the Government spent $42 billion more than it earned in revenue. Budget deficits worry economists as the Government needs to spend more money servicing its loans.

Government spending: Treasury has already confirmed that it has cut $20 billion from its expected expenditure in savings in this budget update. These savings came in part from cutting $6.8 billion from contractors, consultants, labour hire and non-wage costs across the public service. (However, despite the cuts, this doesn’t mean the deficit is $20 billion less, because the government has said they have spent over budget in some areas, including for natural disasters.

How the economy is going: MYEFO is expected to note that business investment rose 3.4% in the three months to September, the highest growth rate since March 2021. Business investment growth is expected to be double initial forecasts this year at 3%, and return to 1.5% through to 2026-27.

Recent announcements from government: The Government announced this month that energy rebates for households and businesses will not be extended into next year. This was described as a “difficult decision”. 

We’ll find out the rest when the MYEFO is released today. 

Reporting by Lachlan Keller.

In case you missed it, the Federal Government announced on Sunday it is cracking down on price gouging in Coles and Woolworths. 

Treasurer Jim Chalmers said the rules are aimed at helping bring down the cost of groceries for everyday Australians.

Supermarket giants Coles and Woolworths argue the new rules will actually drive prices up. 

Let’s unpack what’s going on.

Price gouging is the practice of deliberately and unnecessarily inflating a product’s price, especially when a consumer has few alternative places to buy that product.

It is not currently explicitly illegal. There are no laws prohibiting how high businesses can raise prices. However, it is illegal for businesses to lie or mislead customers about the reason for a price hike, however. 

Prices are also meant to be kept in check by a well-functioning marketplace, and regulators can step in if that process breaks down.

The new legislation, aimed at Coles and Woolworths, prohibits charging prices that are deemed to be “excessive” compared to the cost of supplying that product, plus a “reasonable” margin.

The Australian Competition and Consumer Commission (ACCC) will be in charge of policing the excessive pricing regime. 

If retailers breach the new laws, they could be fined up to $10 million per breach, or three times the value earned through the action of price gouging. 

If the true value cannot be determined, they will be docked 10% of turnover from the previous 12 months.

The new legislation was written into the Food and Grocery Code and will come into effect on 1 July 2026.

“These changes give the regulator the powers and the penalties it needs to hold supermarkets to account,” Mr. Chalmers said.

An ACCC report in February found that Australian supermarkets, including Aldi, are among the most profitable in the world.

It found that Coles and Woolworths raised prices during the cost-of-living crisis to boost profits and that the high concentration of the Australian market gave big players little incentive to compete on price. 

Coles and Woolworths control nearly 70% of the supermarket industry in Australia, while Aldi has a 9% share, and Metcash-operated stores, such as IGA, have 5%.

Between late 2022 and early 2023, grocery prices were found to be growing at more than twice the rate of wages.

The report made 20 reform recommendations to the federal government, including forcing supermarkets to be more transparent on pricing.

It stopped short of alleging price gouging was happening in the sector.

Coles and Woolworths have hit back at the measures, arguing that the added administrative burden will actually increase the costs for consumers. 

"At a time when the focus should be on easing cost-of-living pressures, these regulations risk doing the opposite," a Coles spokesperson said.

"For every $100 customers spend at Coles, we make around $2.43 in profit — less than 3 cents in the dollar," they argued.

With a current valuation of $29 billion, Coles has attributed higher grocery prices to the rising costs of doing business, such as energy, fuel, insurance, production, freight and distribution.

A spokesperson for the Woolworths Group said average food prices in their stores had declined for nearly the past two years. 

“The law is unprecedented by targeting only two Australian-owned companies, creating an uneven playing field which will see much larger, foreign-owned retailers [such as Aldi] free to charge customers whatever they want, without any of the new proposed restrictions,” the spokesperson said.

Supermarket prices have been one of the few areas of bipartisan agreement in recent years, with lowering the cost of living being a primary focus for both major parties at the last election.

The measures are expected to have bipartisan support. 

Shadow Treasurer Ted O’Brien was contacted for comment. 

Reporting by Lachlan Keller.

A lawsuit worth $US10 billion is a lawsuit worth talking about.

In case you missed it, U.S. President Donald Trump has filed a $US10 billion lawsuit against the BBC over its editing of a documentary featuring a speech he delivered before his supported stormed the US Capitol on 6 January 2021.

Trump said the lawsuit was the result of the BBC “putting words in [his] mouth”.

The BBC has yet to publicly respond to this week’s legal application. However, in an apology last month, the broadcaster said that while it “sincerely regrets the manner” in which the content was edited, it does not believe there is “a basis for a defamation claim”.