The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics, shows annual top-line Australian food price inflation had slowed to 8.0 per cent in the March 2023 quarter, from 9.2 per cent seen in the previous (December 2022) quarter.
Rabobank senior food retail analyst Michael Harvey said while this easing was good news for consumers, indicating “Australia has passed peak food inflation as we had largely been anticipating,” the figure was still well above the long-term (10-year) average of food inflation of 2.2 per cent.
Mr Harvey said the March 2023 CPI showed there were “mixed results across the food basket which reinforces Rabobank’s view that food price inflation will remain elevated for some time, and it will be a bumpy road to a more normal food inflation environment locally”.
Mr Harvey said the outlook for food price inflation for the remainder of year would be dependent on growing conditions for Australia’s agricultural sector.
“And we will also be keeping a close watch on global pressures, which have contributed to the food inflationary pressures, such as commodity markets, supply chain shocks and elevated energy prices,” he said.
Overall, the latest figures showed “the meat aisles are providing less ‘sticker shock’ for consumers.”
“For example, deflation was actually evident in lamb – the only sub-category in food to record a decline in prices. Lamb prices declined 2.4 per cent year-on-year compared with a 3.2 per cent year-on-year increase recorded in the previous quarter,” Mr Harvey said.
Lower price inflation levels (of single digits and below the headline 8.0 per cent) were also recorded for other categories including vegetables, beef, pork and spreads, according to Rabobank.
Rabobank associate analyst Pia Piggott said some fresh produce is seeing the benefit of more normal growing conditions and better availability.
“That said, fruit price inflation is still up 10.6 per cent year-on-year, with the impacts from weather events in 2022 still being felt on supply and prices of fruit,” she said.
“Avocados have also seen quite a high increase in prices over the first quarter of the year as supply from Western Australia was down, but as we have seen prices soften more recently and expect this to continue to do so as Queensland begins its Hass avocado harvest.”
Mr Harvey said some food categories “remain challenging for Aussie consumers with double digit rates of inflation still seen for bread, dairy and cooking oils.”
“And rates of inflation actually increased in the March 2023 quarter for cheese, snacks and eggs.”
“(It would) remain a volatile consumer market ahead given the broader cost of living pressures.”