Coles and Woolworths are holding the line on grocery delivery prices, at least for now. Both chains told 9News there are no current plans to raise the cost of getting groceries delivered to your door, despite crude oil prices climbing toward levels not seen in years.
But the commitment comes with a caveat. Neither supermarket has ruled out future price shifts, declining to comment on what happens if fuel costs keep rising.
The decision puts the supermarkets at odds with much of the transport sector. Petrol prices have jumped 50 cents a litre – from $1.69 to $2.19 – on average across Australia since the start of the US-Iran war. Airlines including Qantas have already hiked airfares due to jet fuel costs, while rideshare company DiDi Australia announced a fuel surcharge increase this week.
Major banks are forecasting even grimmer conditions ahead. Prices have fluctuated sharply, reaching almost US$120 per barrel in recent days before easing to about $100 on Friday. Westpac's modelling suggests prices could hit US$110 a barrel in the coming weeks, with diesel averaging around $2.02 per litre and petrol $2.50 per litre between April and June.
Surcharges spreading across freight and logistics
For most fuel-dependent businesses, absorbing cost increases is not an option. Traditionally, the fuel surcharge has been anywhere between 5% to 20% over and above the freight cost. At the moment, we are seeing the surcharge hit anywhere from 25%, up to about 45%. Parcel couriers adjust their fuel levies monthly, and Australia Post publishes surcharge updates six weeks in advance to help customers plan.
The supermarkets' decision to hold delivery prices flat may reflect a different business model. Grocery delivery fees are typically bundled into subscription packages rather than itemised like freight surcharges. This structure gives retailers more flexibility in how they manage margins without explicitly raising visible prices to customers.
Australia's vulnerability to fuel supply shocks runs deep. Iran has effectively closed the Strait of Hormuz, a critical passageway that carries 20 per cent of the world's oil supply, and plunged oil markets into chaos as fears grow about global fuel supplies. The country relies heavily on imported refined fuel, with only two operating refineries remaining.
The cost of waiting
By holding delivery prices steady, Coles and Woolworths may be betting that either fuel costs stabilise quickly or they can absorb temporary margin compression. The alternative – raising prices visibly – carries reputational risk at a time when shoppers are already frustrated about grocery affordability and both chains face legal scrutiny over pricing practices.
Yet the longer oil prices remain elevated, the harder it becomes for retailers to maintain that position. Transport costs cascade through supply chains, affecting everything from cold chain logistics to warehouse operations. Unlike airlines, which pass fuel costs directly to customers through ticket prices, supermarkets must balance competitive pressure against rising operational expenses in ways that aren't always visible on the shelf.
For consumers, the current price freeze offers temporary relief. But whether it holds depends on decisions made in Tehran, geopolitical tensions in the Middle East, and the basic economics of whether Australian retailers can afford to treat fuel as a loss leader.