The head of the competition regulator has questioned whether the supplier of packaged goods for most independent grocers may be helping to push up grocery prices.

The chairman of the Australian Competition and Consumer Commission, Graeme Samuel, told a hearing in Melbourne of a national inquiry into grocery prices that he was "at a loss" to determine if there was any competitive pressure on the two main supermarket chains.

He said pressure was "certainly not" coming from the market’s independent sector, which matched, rather than competed with, Coles and Woolworths prices.

"If you look at the lines on the [prices] chart between Coles and Woolworths, they’re so close together it’s barely discernible in price," he said.

"I’m at a loss to try and find where the competitive edge is coming from. It’s certainly not coming from the independent sector, because the independent sector says, ‘We are really matching, on everyday items, the price of Coles and Woolworths.’ "

Mr Samuel said evidence offered at a previous hearing had suggested that independent retailers were matching Coles and Woolworths prices in part because they did not make much profit from the packaged goods supplied by Metcash, the main supplier for independent IGA stores across Australia. Instead, they made profits from other groceries, including fresh food.

But outside the hearing yesterday John Cummings, the chairman of the National Association of Retail Grocers of Australia, which represents about 4500 independent grocers, said his evidence had been taken out of context.

He agreed he had said independent supermarkets could not be sustained on profits from packaged goods alone, but added that large chains did not make much on dry goods either.

At the last public hearing of the inquiry yesterday, the chief executive of Metcash, Andrew Reitzer, said the company passed on fair prices to independent retailers so they could be the third force in a highly concentrated market.

He said independent retailers aimed to match the prices of the big chains but there was competition in the form of promotions, which average at about 40 per cent of sales. "If it wasn’t for Metcash, this inquiry would be about two players in the market, full stop," Mr Reitzer said.