Shoppers still feel the impact of rising prices at the supermarket despite inflation lowering, the treasurer admits.
Household grocery bills have soared in recent years, with research by comparison website Finder showing grocery spending at a record high in January.
While underlying inflation fell to 3.2 per cent in the December quarter, Treasurer Jim Chalmers acknowledges the high prices remain challenging.
"People are still under pressure. I know at the supermarket checkout, people are still feeling the pinch. We don't pretend otherwise," the treasurer said on Monday as he prepares to announce the federal budget on March 25.
"But inflation is coming down. If you think about food inflation in particular, that was 5.9 per cent when we came to office and now about half that at three per cent."
Opposition Leader Peter Dutton said the rising costs of groceries was evidence the government's economic strategy was not working.
"If the last three years have been a success for the Albanese government and a success for our country, there wouldn't have been a 30 per cent increase in food prices," he told reporters in Melbourne.
"People wouldn't be paying 34 per cent more for their gas. People wouldn't be struggling to send their kids to school or to pay to go and see a doctor."
Research from Finder showed a household comprising a couple with two children spends an average $270 per week on groceries, or about $14,000 a year.
It found four-in-five Australians were trying to reduce their grocery bills by cutting back on non-essentials, switching to cheaper brands and using coupons.
A spokesman for Coles said the supermarket chain was working to provide lower costs to customers amid rising cost-of-living expenses.
"For more than four years, we have kept grocery inflation at our supermarkets below the Australian Bureau of Statistics rate for the sector," the spokesman said.
"Inflation is the enemy of keeping prices low. Grocery prices are heavily influenced by ingredients, such as cocoa and wheat and other commodities, rent, fuel, wages, energy, shipping, and transport, which have mostly risen since 2022."
A Woolworths spokesman said prices at its stores had been dropping.
"Over the last four financial quarters we have reported decreases in average prices across our supermarkets," the spokesman said.
"Our focus is on giving our customers more value, convenience and a better shopping experience whether that's in store or online."
