Food prices tipped to go up

By Country News

Australian consumers can expect to pay more for food as rising agricultural commodity prices continue to affect manufacturers and retailers, a new ANZ report shows.

The latest ANZ Agri InFocus commodity report showed Australian retail food prices had increased by a modest fivepercent since 2010 due to a relatively high Australian dollar and lower oil prices, which aided the affordability and accessibility of imported foods.

At the same time, there has been a higher price growth for electricity and housing, and relatively strong growth in retail food prices in other countries from the Organisation for Economic Co-operation and Development.

‘‘Since 2014, Australia’s food manufacturers and retailers have faced increased pressure to maintain shelf prices due to growing domestic and global competition,’’ ANZ agribusiness head Mark Bennett said.

‘‘This has caused many of them to lower their margins in a bid to maintain customers and market share,’’ Mr Bennett said.

Data from the Australian Bureau of Statistics showed farm-gate prices no longer align with retail prices, further emphasising the challenges food manufacturers and retailers face.

And, despite a significant 30 index point increase in the cost of on-farm production, retail prices have grown by only five index points since 2011.

For example, Australia’s red meat sector has experienced significant price gains at the saleyards, but those increases have not been passed on to consumers. Instead, they have been absorbed by the supply chain.

‘‘High prices for agricultural commodities reflect the hard work of our farmers and the quality of Australian produce and will help drive long-term industry sustainability and regional prosperity,’’ Mr Bennett said.

‘‘However, as production costs continue to rise, combined with a potentially lower Australian dollar, it’s unrealistic to expect manufacturers and retailers to absorb costs or use more affordable imports to maintain lower prices, so we expect consumers to be paying more for food in the coming years.’’