Ricardo's Business: Down down, prices are down

The battle between Coles and Woolworths is heating up.

For years, Woolies has been number one, but for the ninth quarter in a row, Coles' quarterly sales growth has outpaced that of its competitor.

Coles has seen a dramatic restructure ever since it was taken over by Wesfarmers in 2007 which has been the catalyst for its turnaround.

Interestingly, despite yesterday's CPI figures pointing to rising consumer prices, Coles says prices at its stores are actually down almost 1 per cent year on year.

So how is it making its money in a fiercely competitive environment at a time when the consumer is becoming more and more cautious?