Food inflation is easing, according to latest ABS CPI data

The latest Consumer Price Index (CPI) data released by the Australian Bureau of Statistics (on 27 July) shows food inflation easing in the June quarter.

Rabobank senior food retail analyst Michael Harvey said, “Food inflation is at 1.6% for March to June (unchanged from the last quarter) and 7.5% year-on-year — slowing down from last quarter at 8%.”

Annual price increases were highest for dairy products (15.2%), bread and cereal products (11.6%) while price rises were softer for fresh food categories like meat and seafood (3.5%) and fruit and vegetables (1.6%).

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“Effects of wet weather are still playing a part in food and vegetable inflation, with reduced supply for some fruit and vegetables; however, this is also being balanced out by good weather conditions in some growing regions leading to abundant supply of certain vegetables like capsicums and avocados,” Harvey said.

Snacks and confectionery inflation has increased from March year-on-year figures, “This is driven by increased costs of production and price rallies in inputs, like sugar and cocoa. While food inflation is on the decline, consumers’ favourite indulgence categories — ice cream, snacks and confectionery — have seen increased inflation,” Harvey said.

“Most other food categories have seen inflation rates decrease, which shows we are well past the food inflation peak, but still well above long-term averages.

“For many categories we are at the later stages of the inflationary cycle, but the outlook for the rest of the year will remain dependent on growing conditions in Australia — considering risks such as El Niño — as well as global commodity markets.”

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