Since September, a set of about 400 everyday grocery lines at Woolworths and Coles have been progressively repriced downward. Neither retailer has announced a price war. Both are, in effect, waging one.

The lines affected are the ones consumers use to compare stores: milk, bread, eggs, laundry detergent, cheap cuts of meat, some staple canned goods. The margins on these lines were already thin. They are now, in several cases, negative.

What the analysts say

Bank analysts covering both retailers have begun to write, quietly, about the margin drag. Neither analyst thinks the current pricing is sustainable indefinitely. Both think the pressure will continue at least until the ACCC's grocery inquiry reports later this year.

The private-label share of both retailers has grown throughout the war. That growth, more than any single price cut, is where the retailers will recover margin over the next twelve months.