MELBOURNE, May 11, 2026, 08:01 AEST
Coles Group Ltd. heads into Monday’s ASX session with investors weighing a simple question: can strong supermarket sales hold up if fuel, freight and supplier costs keep rising? The stock last traded at A$21.63, down 0.8%, at the May 8 close.
The timing matters because Australia’s grocery sector has moved back to the centre of the inflation debate. The Reserve Bank of Australia last week sharply raised its inflation forecasts, with headline inflation now seen peaking near 5% as a global energy shock lifts fuel costs and weighs on growth.
Coles’ own numbers show demand is not the problem, at least not yet. The company said third-quarter supermarket sales rose 4.0% to A$9.8 billion, while eCommerce — online sales — jumped 24.8%; liquor sales, however, fell 3.9%. Chief Executive Leah Weckert said Coles had delivered “another strong sales result” while navigating supply-chain volatility.
The squeeze is now shifting to margins. Coles said supermarket price inflation excluding tobacco eased to 0.8% in the quarter, helped by cheaper fresh produce, but it also reported more supplier cost-price requests and higher fuel, freight and packaging costs in recent weeks.
A fresh 9News analysis published early Monday put the consumer issue in plain terms: under a 7% inflation scenario, a grocery basket it tracked at Coles would rise to A$74.58 from A$69.70. It also cited UNSW economist Timothy Neal saying Australia relies on imported fertiliser from the Middle East and that urea prices had risen more than 50% since the war began.
The competitive backdrop is not soft. Larger rival Woolworths Group reported A$18.1 billion in quarterly sales and about 6% growth in Australian Food, but its shares fell after it warned domestic food earnings growth would no longer reach the upper end of its range and said it would freeze prices on 300 staples.
Morningstar analyst Johannes Faul wrote that Coles’ supermarket sales growth lagged Woolworths in the quarter and that “the tables have turned” after a period of Coles outperformance. Faul kept a A$16.50 fair value estimate on Coles and warned online growth was another margin headwind because fulfilment costs make it less profitable than store sales. Morningstar
Farmers and food charities are also pressing the big chains. NSW Farmers economist Sam Miller told ABC Rural he was concerned price increases were not being shared “equitably and fairly,” while a Coles spokesperson said the retailer aimed to absorb costs where possible and had lowered prices on about 400 lines in its autumn value campaign. ABC News
The risk for Coles is that it gets squeezed on both sides. Absorbing more supplier and fuel costs would protect shoppers but could dent margins; passing through too much could push price-sensitive customers toward Woolworths, Aldi or independents.
Pricing conduct remains another overhang. The ACCC’s case against Woolworths is expected to wrap up, while a similar case against Coles over alleged misleading discounting is awaiting judgment, ABC reported; Coles has denied misleading shoppers.
The ASX was still before normal trading when this article was filed. Regular cash-market trading runs from 09:59:45 to 16:00 Sydney time, so Monday’s open will give the first read on whether investors focus more on Coles’ online and supermarket growth or the new cost shock moving through the grocery chain.
