'Dodgy' supermarkets to pay the price under changes

The code, which governs the relationship between supermarkets and suppliers, is voluntary at present but will become mandatory from April 2025.

The government's proposal provides maximum fines under the code as the greater of $10 million, three times the benefit gained from the breach, or 10 per cent of turnover in the previous 12 months.

The Australian Competition and Consumer Commission would also be given extra powers to issue infringement notices to supermarkets that breach the code.

Prime Minister Anthony Albanese said the government had put supermarkets on notice.

"Dodgy behaviour that costs Australians will not be tolerated," he said.

The government has put supermarkets on notice, Anthony Albanese says. (Mick Tsikas/AAP PHOTOS)

"We want to see a fair deal for Australian families at the checkout, and a fair deal for our farmers."

Treasurer Jim Chalmers said Labor knew cost-of-living pressures were hitting Australians hardest at the checkout.

"Our new mandatory code has strong penalties that tell the supermarkets we're serious about getting a fair go for families and farmers," he said.

The government is hoping for an interest rate cut by the Reserve Bank before the a federal election, which is due to be held by May 2025.

The coalition has routinely accused Labor of being out of touch, or not doing enough to bring down inflation and cost of living pressures.

The government also has targeted the practice of "shrinkflation" - when a product is sold for the same price though its size has been reduced.

Coles and Woolworths make up almost 70 per cent of supermarket retail sales.

The two chains have previously said they remained committed to keeping prices low, and that pack and serving sizes were up to individual manufacturers.

Australia's consumer watchdog announced in September it was taking legal action against Coles and Woolworths for allegedly misleading customers.