By Andrew Brown in Canberra

Soaring prices at the checkout, a lack of competition in the sector and customers losing trust about specials and discount schemes.

That’s the competition watchdog’s assessment of the state of Australia’s supermarket industry as it looks to make the weekly shop fairer for consumers.

The Australian Competition and Consumer Commission released its interim report on supermarkets on Friday, laying out issues in the sector.

While the report did not detail recommendations, the commission’s deputy chair Mick Keogh said there was concern about how major supermarkets were abusing their powers.

“Oligopolistic market structures can limit incentives to compete vigorously on price,” he said.

“We see Woolworths and Coles providing a broadly similar experience to customers through largely undifferentiated product ranges, pricing at similar levels and similar non-price offerings including loyalty programs.”

The supermarket inquiry received information from more than 21,000 customers, the most for a consumer survey carried out by the commission.

The report found the majority of low-income households had to spend 20 per cent of their pay on groceries, while the cost of a typical basket of goods increased by 20 per cent in the past five years.

Mr Keogh said customers across the board faced difficulty when trying to compare prices, and some felt forced to take part in loyalty programs and hand over personal information to access cheaper goods.

“Many consumers have told us that they are losing trust in the sale price claims by supermarkets,” he said.

“These difficulties reportedly arise from some of the pricing practices of some supermarkets, such as frequent specials, short-term lowered prices, bulk-buy promotions, member-only prices and bundled prices.”

The report’s release comes days after the commission said it would take Coles and Woolworths to court over claims of misleading specials, alleging the chains increased prices only to place them in a promotion at a reduced price that was still higher than the original cost.

Coles and Woolworths make up 67 per cent of the supermarket sector, with the interim report also noting the considerable time it took the next largest chain, Aldi, to increase its market share – 20 years to get to nine per cent.

“Planning and zoning laws may slow a supermarket retailer’s ability to develop new stores by creating additional costs or adding significant delays,” Mr Keogh said.

Prime Minister Anthony Albanese said the federal government would examine the report closely.

“Customers don’t deserve to be treated as fools by the supermarkets – they deserve better than that,” he said.

“My government is taking a range of actions to make sure Australians are paying a fair price at the checkout and Australian suppliers are getting a fair price for their goods.”

Public hearings are expected to be held as part of the inquiry in October and November before the final report is handed to the government by the end of February.