The Australian Competition and Consumer Commission started public hearings on Thursday for its inquiry into the supermarket sector.
Representatives from Woolworths, Coles, Aldi and Metcash - which licences the IGA brand and others - will appear throughout November.
Hearings will examine price-setting practices, retail competition, supply chain concerns and the profit margins of major chains.
Many consumers have lost trust in supermarket pricing, while suppliers have said they are forced to agree to unfavourable terms, according to the commission's interim report.
Choice campaigns director Rosie Thomas told the inquiry that public perception had earned Coles and Woolworths the consumer advocacy group's Shonky award for "cashing in during a cost-of-living crisis".
"There is this real belief among consumers that they are feeling frustrated and skeptical about the prices," she said.
The scepticism was much higher amongst Coles and Woolworths shoppers, with almost two-thirds believing the pair profited by increasing prices, compared with just over a quarter of Aldi shoppers, Ms Thomas added.
But Choice did not have the data to establish whether the supermarkets were in fact, "cashing in", and only the consumer watchdog had the information-gathering powers required to get the truth, she said.
Assistant Competition Minister Andrew Leigh said a mandatory code of conduct governing the relationship between supermarkets and suppliers would soon replace a "toothless" voluntary code.
"The Albanese government will introduce legislation later this month to attach significant penalties for supermarkets that breach the food and grocery code," he said.
In September, the ACCC sued Coles and Woolworths, claiming the retailers misled customers with illusory discount schemes.
Both grocers deny the allegations and say the cases are misconceived.
The federal government will provide $30 million in extra funding for the consumer watchdog to continue investigations and enforcement in the supermarket and retail sector.
A final report on the inquiry is due to be delivered to the government by February.
