Wesfarmers chief executive Richard Goyder said big retailers charge lower prices by benefiting from economies of scale that smaller retailers cannot achieve.

"Economies of scale are necessary to optimise supply chain efficiency, lower costs, deliver value to the customer and serve Australians in multiple locations," he told an Australia-Israel Chamber of Commerce lunch in Melbourne.

The Wesfarmers chief executive challenged the idea that a lack of competition allowed big retailers to charge inflated prices, saying that over the past five years profit margins among major food retailers, including Coles, were below 5pc, substantially lower than the 12pc average margin for companies listed on the Australian Securities Exchange with sales greater than $100 million.

Mr Goyder's remarks come as the major food chains brace themselves for findings from the Australian Competition and Consumer Commission inquiry into grocery pricing, expected this month.

Between them, Coles and Woolworths - the company behind Safeway - have about 75pc of the Australian grocery retailing market.

Mr Goyder said higher food prices were here to stay as the powerhouse economies of Asia continued to Westernise, putting pressure on food supplies.