Woolworths says its annual profit has been flattened due to product shortages.

The supermarket giant posted results this week showing annual net profit from continuing operations rose by just 0.7 per cent to $1.51 billion, with sales up 9.2 per cent (to $60.85 billion) for the year.

The company will pay shareholders a final dividend of 53 cents per share.

Woolworths said its goods increased in price by an average of 3.6 per cent between April and June due to “industry-wide input cost pressures”.

The price of meat (particularly beef) and vegetables have risen due to supply disruptions caused by wet weather and flooding, but fruit prices fell in the June quarter.

The surging cost of living is “beginning to impact all aspects of our customers' shop and we are seeing a gradual change in customer shopping behaviour”, the company said. 

“While still very difficult to separate from the COVID-related impacts of the last two and a half years, we are seeing some customers trade down from beef into more affordable sources of protein and trade across from fresh vegetables into more affordable frozen and canned offerings.”

Woolworths chief executive Brad Banducci expects difficult times ahead.

“In summary, we expect the trading environment to remain volatile and challenging due to endemic COVID disruptions, ongoing supply chain challenges, higher costs across our business and cost-of-living pressures for our customers,” Mr Banducci said in a statement.

“However, we are increasingly more agile and purposeful in responding to these challenges and are focused on improving our underlying operating performance across all aspects of our value chain after three years of disruption.”