Supermarkets have been under pressure for overcharging for everyday items as cost-of-living pressures increase and shopping bills go up.

The Australian Competition and Consumer Commission is undertaking a year-long inquiry into whether consumers are paying too much at the checkout.

The highly perishable nature of fruit, vegetables and nursery products meant it was hard to find buyers at short notice and other markets were not viable as they weren’t large or accessible enough, the the National Farmers Federation argued.

They are calling for supermarkets and large businesses that consistently and systemically breach consumer codes and rip off producers to be severely punished.

Penalties should include a timed cap on future expansion of market share and divestiture powers, the council said.

Prime Minister Anthony Albanese has rejected calls for big stick divestiture powers to force compliance after he likened such policies to the old Soviet Union.

A widening price imbalance between farm and supermarket prices was also a concern, Tasmanian farmers said.

While farmers faced the impact of fluctuating commodity prices, supermarkets passed on price hikes which meant consumers bore the brunt of rising costs for essential items, TasFarmers argued.

They called for a fair and transparent pricing structure that gave fair compensation to farmers and addressed high prices at the checkout.

The supermarket duopoly also failed to pass on cuts in beef prices and offer up “every excuse possible why the retail price of meat hasn’t come down”, the Australian Beef Association added.

But the business lobby argued restrictive market practices would reduce investment and result in layoffs.

Supermarkets played a vital role in Australian communities and the broader economy as they provided essential goods at competitive prices and employed hundreds of thousands of workers, the Business Council said.

Profits were important for a business to remain sustainable as “unprofitable companies do not invest and hire for long”, it said.

Instead, there needed to be policies that tackled inflation and didn’t add undue burdens and costs to businesses.

Woolworths, Coles, Metcash – the owners of IGA and Mitre 10 – and Aldi are already signatories to a code of conduct despite some calls to make it mandatory.

Coles has defended its prices, saying they’re dependent on seasonal conditions and are a result of supply and demand while Woolworths said it worked to strike the right balance between high quality produce and giving suppliers a fair price.

– AAP