"The inquiry will scrutinise the impact of market concentration on food prices and the pattern of pricing strategies employed by the supermarket duopoly," Greens senator Nick McKim said in a statement, referring to Australian grocers Woolworths and Coles.
"It will also assess the rise in essential item prices, the validity of discounts offered, and the inflation of profits during economic hardship," added McKim, accusing supermarkets of "price gouging" during "Australia's cost of living crisis".
Woolworths and rival Coles, which together make about two-thirds of Australian grocery sales, have previously drawn criticism from the left-wing Greens over claims of "unfair price hikes" on groceries, as Australia struggles to rein in stubbornly high inflation.
A Coles spokesperson said in a statement the company was "always exploring ways to reduce prices on the products we sell" and was "not immune to the increased cost of doing business".
"Construction costs, energy prices, the cost of logistics and packaging have all risen", the spokesperson said.
A Woolworths spokesperson said the company was "working to deliver relief" on grocery bills.
"As we start to see the rate of inflation ease, we will continue to focus on delivering savings to our customers," the spokesperson said in a statement.
The Reserve Bank of Australia has hiked interest rates 13 times since May 2022 in an effort to rein in inflation, increasing living cost pressures nationwide.
(Reporting by Sam McKeith in Sydney; Editing by Lincoln Feast.)