The latest quarterly Consumer Price Index (CPI) data, released today, has shown a continuing rise in Australian food price inflation, with June 2022 quarter food prices increasing 5.9 per cent compared with the June quarter last year.
Rabobank senior food retail analyst Michael Harvey said this was the highest year-on-year increase seen in food prices in the CPI since the September quarter 2011, when yearly food price inflation had peaked at 6.4 per cent.
It compares with a 4.3 per cent year-on-year increase in food prices seen in the previous March 2022 quarter CPI data.
Mr Harvey said there had been an increase “across the grocery basket”, with prices rising for dairy, meat, fruit and vegetables and bread.
“There was also an increase in out-of-home food costs,” he said.
And Mr Harvey warned there was likely more food price rises to come, with the peak in inflation potentially not yet reached.
“Consumers still have some headwinds to navigate and higher average food basket costs expected to come,” he said.
The Australian Bureau of Statistics June 2022 quarter CPI data showed the main contributors to the rise in food prices included fruit and vegetables, which were up 7.3 per cent annually and 5.8 per cent on the previous quarter.
Prices for bread and cereal products were up 6.3 per cent annually and 3.1 per cent on the March quarter and meat and seafoods were also up 6.3 per cent annually, but only 0.8 per cent on last quarter.
Dairy and related product prices were up 5.2 per cent annually and 1.3 per cent on last quarter.
Meals out and take-away foods costs were up 4.7 per cent annually. Compared with the March 2022 quarter, prices increased 1.4 per cent, but 2.1 per cent excluding the impact of dining voucher schemes offered in some parts of the country.
Mr Harvey said there were a number of factors still exerting upward pressure on food prices, both globally and locally.
“While the effect of the war in Ukraine was evident in high global agricultural commodity prices in the June quarter, an easing in these prices in July will take time to flow on to food markets internationally,’ he said.
“In addition, there are still cost pressures across the food system – in areas including labour, energy, freight and packaging.
“And there have been further supply disruptions locally with flooding and unfavourable weather in parts of Australia continuing to impact the availability of fresh produce.”
Mr Harvey said while there had been some short-term freezes placed on food prices by some retailers, retail food prices were likely to continue to rise following recent price increases from food and beverage companies, with more potentially to come.
“In recent weeks, for example, we have seen some sizeable increases in staple items, like private-label milk,” he said.
Mr Harvey said there were emerging signs of changed consumer behaviour in response to cost-of- living pressures, including trading down in food types and reduced spending on discretionary items. “And we expect there is more to come,” he said.
Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of approximately 8.4 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 90 branches throughout Australia and New Zealand.
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