Coles Group's quarterly update revealed an acceleration in same store growth for Supermarkets, to 4.2% from 3.6% in Q2, points out Morgan Stanley.

Volume growth was positive amidst falling inflation. Customers remain focused on value for money. Liquor's performance was in line with the preceding quarter.

Morgan Stanley also picked up that inflation in packaged foods is expected to continue, while fresh pricing is 'normalising'.

Equal-weight and $16.50 target retained. Industry view: In-Line. No changes made to forecasts.

Sector: Food & Staples Retailing.

Target price is $16.50.Current Price is $16.22. Difference: $0.28 - (brackets indicate current price is over target). If COL meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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