Aug 23 Reuters Earnings of Australia39;s two biggest supermarket chains may get a boost from sustained demand for groceries and other essentials, but their comments on costs will be in focus as everything from fuel to labour gets expensive.

As prices gallop to near threedecade highs, prompting the Reserve Bank of Australia to go on a ratehike spree, supermarket chain operator Woolworths Group and smaller rival Coles have endured the heat by passing on higher costs to customers.

Consumers, on their part, are changing their spending habits to battle the effects of inflation by picking up produce off shelves instead of eating out more, prompting analysts to predict upbeat results for the chains for the financial year ended June 30.

We expect consumer stocks to report solid FY22 results and provide strong trading updates given consumer demand has persisted, Jefferies analysts wrote in a note.

While the current reporting period is too early to reflect any weakness, any commentary from Woolworths and Coles suggesting a change in buyers39; behaviour could sour investor mood, the analysts said.

Expenses will also be a major focus, though the companies, which together account for twothirds of Australian grocery sales, have in the past said they would pass on rising energy and ingredient costs to price tags.

Investors would look out for their views on cost, especially on how they have managed COVID expenses and impact from floods, brokerage UBS said.

Solid Australian…