"We are expecting that more customers will be value conscious as cost of living pressures increase, such as rising mortgage payments and energy prices," Coles said.
It also warned that pressures associated with packaged goods, wages, and energy would result in a net increase in costs of A$10 million for the full year.
Net profit after tax for the six months ended December rose to A$643 million ($444 million) from A$549 million reported a year ago.
Cole's cost reduction program, Smarter Selling, brought savings of about A$100 million in the first half, while COVID-19 related costs dropped to A$20 million from A$150 million a year ago.
The company's supermarket business, which accounts for most of the group's earnings, posted first-half sales revenue of A$18.85 billion, up from A$18.02 billion a year earlier. "In the current quarter, Supermarkets volume growth returned to modestly positive from mid-January," it said. Coles raised its interim dividend by 9% to 36.0 Australian cents per share from a year ago.
Separately, Coles said it has promoted Leah Weckert to chief executive officer from May 1 to replace Steven Cain, who is retiring. ($1 = 1.4468 Australian dollars) (Reporting by Roushni Nair in Bengaluru; Editing by Sandra Maler, Chris Reese and Sonali Paul)
