Australian grocery stores are expected to see positive profits due to rising inflation, with consumer behavior playing a crucial role.

By Himanshi Akhand and John Biju

(Reuters)‌ – Australian supermarkets are set to report stronger full-year earnings as decades-high inflation propped shelf prices, but outlook on consumer behaviour with rising ⁣borrowing costs and expenses would be key, according to analysts.

Top Supermarket Chains Expected to See Higher Profits

Top supermarket chains Woolworths‌ Group⁣ and Coles Group are expected to post higher annual profit, according to⁣ analyst estimates, as shoppers opt against out-of-home consumption‌ and cut costs amid ‌spiralling living expenses.

“Our channel checks and pricing ‍study suggest COL & WOW have been lifting shelf prices ​by more ‍than the wholesale price increases they are accepting. ⁤We expect this will be reflected‌ in higher gross margins,” Jefferies analysts wrote in⁤ a note.

Coles and Woolworths sell two-thirds of Australian groceries by dollar value, ⁢and are seen as bellwethers of consumer behaviour.

“While the big supermarket chains are ⁤doing well in this era of high inflation, discretionary retailers are finding ⁢the ​going much tougher as consumers are‌ forced‌ to be more selective⁢ about their spending,” said Tim Waterer, chief market analyst at KCM Trade.

Interest rates in Australia have⁤ climbed by 400 basis points since May last year and added hundreds‍ of dollars to monthly mortgage repayments, causing⁢ a slowdown ⁢in consumer spending.

Retail sales in the country suffered their biggest fall this year in June.

For retail conglomerate Wesfarmers, analysts suggest its budget⁢ department store Kmart will continue to benefit from ⁤rising inflation, while sales at ​hardware chain Bunnings, which helped the company make most⁢ of its profit for years, are seen declining.

Coles, which will report its annual results on Tuesday, is ⁣expected to post net profit after tax (NPAT) of A$1.11 billion, higher that A$1.05 billion last year, according to Refinitiv data.

Full-year NPAT of Woolworths is seen rising to A$1.74 billion from A$1.51 billion, and for Wesfarmers to A$2.47 billion from A$2.35 billion ‌last year.

Woolworths and Wesfarmers report annual⁤ results on Aug. 23 and Aug. 25, respectively.

“Given the slowing consumer, trading ⁤to start fiscal 2024 is the key area of focus, even if the second half of fiscal 2023 ⁤has been better than expected,” UBS analysts wrote.

They added ⁣that rising‍ operating costs are a headwind for retail companies, but focus will be on how these costs are managed.

(Reporting by Himanshi Akhand and John Biju in ⁤Bengaluru; Editing by Rashmi Aich)

In Golden, Colorado, on International Homeless Animal Day, POSO Dog Rescue is​ honoring shelter dog’s who were⁣ once on the kill list.

This week ‍has been filled with major headlines in the U.S. One America’s Rachel Acenas has⁣ more.

Trump picks Tucker over Fox, Elon blocks the block button and Rich Men North‌ of ⁢Richmond continues ⁤to dominate

One America’s ‍Jessamyn Dodd sits⁣ down with ‌California Senate candidate Eric Early to discuss the ​rising crime⁢ in the state.

By‌ Ju-min Park SEOUL (Reuters) – Suspected ⁢North Korean hackers⁣ have targeted a joint U.S.-South Korea military exercise⁢ being held this week…

By Ju-min Park SEOUL (Reuters) –‍ Suspected North Korean hackers have targeted a joint U.S.-South Korea military exercise being⁤ held this week…

SAN FRANCISCO (Reuters) -California’s autos regulator said⁣ on Friday it is investigating “recent concerning incidents” involving⁣ autonomous‌ vehicles operated by General Motors…

By ‍Valerie Insinna and Tim Hepher WASHINGTON⁤ (Reuters) – JetZero, which has won U.S. Air Force backing to build ⁣a demonstrator for…