Rabobank breaks down the June 2022 quarterly CPI figures as food price inflation climbs

Rabobank relays how there has been an increase across the grocery basket with prices rising for dairy, meat, fruit and vegetables and bread

Rabobank senior food retail analyst Michael Harvey runs through an informative summary of how food prices have increases quarter on quarter and also for the full year

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% 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%.

It compares with a 4.3% 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% annually and 5.8% on the previous quarter.

Prices for bread and cereal products were up 6.3% annually and 3.1% on the March quarter and meat and seafoods were also up 6.3% annually, but only 0.8% on last quarter.

Dairy and related product prices were up 5.2% annually but only 1.3% on last quarter.

Get in while you can as June 2022 CPI figures show how fruit and vegetables are suffering one of the biggest price rises up by 7.3% annually and has increased by 5.8% over the March 2022 quarter

Meals out and take-away foods costs were up 4.7% annually. Compared with the March 2022 quarter, prices only increased by 1.4%, but by 2.1% if you exclude 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 2022 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 concluded.