Rabobank senior food retail analyst Michael Harvey said the rise in prices had been “largely expected” — driven by high input costs for food production (such as energy, labour, transport and fertiliser), as well as the impact of wet weather damage on agricultural production.
He cautioned there was further “upside” in food prices likely to come.
“Further rises are expected in food prices in quarter four and into 2023 as the impact of current and recent flooding in agricultural regions weighs on food supply volumes,” Mr Harvey said.
He said the last time food prices had experienced such high annual growth was 16 years ago, in 2006, when Cyclone Larry had devastated Australia’s banana crop, causing a huge spike in prices.
The September 2022 CPI showed food prices had increased by 3.2 per cent on the previous quarter. Headline overall inflation rose 7.3 per cent annually and 1.8 per cent on the previous quarter.
Mr Harvey said the “food price inflation story was once again broad-based, with increases across all food and beverage categories”.
“It has been led by double-digit increases in fresh produce overall, dairy, eggs, coffee and cooking oils,” he said.
“Fruit prices specifically also rose this quarter, after falling in the July CPI. Milk and cooking oil recorded the highest year-on-year price inflation since recording began.”
The September 2022 CPI showed the biggest category contributors to the annual rise in food prices were fruit and vegetables (up 16.2 per cent) and meals out and takeaway (up 6.1 per cent).
Mr Harvey said food price inflation was clearly putting significant pressure on households and there was “evidence of weaker consumer demand already emerging and a difficult 2023 to come for households with a slowing economy, higher interest rates and energy bills all on the horizon”.
