Food price inflation has continued to ease, providing some much-needed relief for consumers.
According to the latest monthly Consumer Price Index (CPI) data released by the Australian Bureau of Statistics, the prices of food and non-alcoholic beverages have increased by 4.6 per cent annually compared to November 2022. This reflects a decrease from the previous year’s inflation rate of 5.3 per cent in this category, and much lower than the peak of 9.6 per cent yearly food price inflation seen in September 2022.
RaboResearch senior food retail analyst Michael Harvey said red meat and fresh produce saw annual inflation of less than one per cent, which “will be welcome news for Australian consumers as they are important categories in household budgets”.
“More sticky inflation was evident in key packaged food categories, such as dairy and bakery,” he continued, “but the good news is there is less ‘sticker shock’ for consumers in these categories as well, with the rate of inflation also moderating and actually at the lowest level since mid-2022.”
Harvey said agricultural commodity prices were broadly range-bound at lower price levels through 2024, which would be “welcomed by consumers as it has been a leading cause of higher food prices”.
However, he said recent rainfall and flooding reinforce the risk to local food supply and prices from unfavourable impacts of adverse weather conditions, particularly across horticulture and fresh produce.
The food supply chain margins also improved “downstream” for food companies due to weaker agricultural commodity prices and easing food processing and distribution costs.
“And with this, food and beverage companies are seeing a sharpened focus to tailor products to a value-conscious consumer, which will be a key theme through 2024 as cost-of-living pressures continue influencing purchasing behaviour,” explained Harvey.
Despite the overall moderating trend, Harvey noted that some outliers, such as cocoa and sugar, have remained higher for longer.
“We will dive deeper into the food basket when December quarter CPI results are released on 31 January,” he concluded.
This story first appeared on our sister publication Inside FMCG
