Coles Has Edge on Woolworths as Food Inflation Looms -- Market Talk

Dow Jones04-02

2337 GMT - Morgan Stanley favors Coles over Woolworths as it dissects what food inflation means for Australia's big two supermarket chains. Analyst Melinda K. Baxter says food inflation supports earnings only when real volumes hold and promotional intensity remains disciplined. In that regard, MS expects competition on price to stay elevated. "We see some support to demand from trade down, private label adoption and continued at-home consumption," MS says. "Even so, these benefits are likely to be modest." Consumers are highly focused on value. Interest rates are rising and fuel prices have jumped on the Iran conflict. They are stretching household budgets more. "Coles enters this phase with stronger supermarket margin and better evidence it can reinvest in value while still expanding margins," MS says.(david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

April 01, 2026 19:37 ET (23:37 GMT)

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