05.Australian food inflation
Headline inflation may have fallen to an annual rate of 1.3%, but despite a drop in the last quarter (largely due to a decrease in fruit and vegetable prices) food inflation is still running high at 2.5% – twice the general inflation rate.
Our survey found some packaged grocery prices have risen well above the rate of average food inflation; we paid 25.7% more for Sunrice Premium White Long Grain Rice (2kg), for example, than we did in our 2007 survey – more than four times the price increase for food generally over the same period. Chum Canned Dog Food (1.2kg) rose 22.1%, San Remo Large Pasta Spirals (500g) is up 19% and Sakata BBQ Rice Crackers (100g) cost 18.1% more. See the table, right.
Who really profits?
There are many explanations for price rises in groceries, including higher costs caused by drought, quarantine restrictions and global commodity price increases. According to supermarket chains, the increasing profit margins of multinational grocery manufacturers are a major contributor to high food price inflation, while suppliers argue the opposite is true. There’s also speculation that major chains are raising grocery prices in order to fund their fuel and liquor discounts and the multitude of price promotions they use to lure customers into their stores (although the supermarkets reject such claims). The ACCC inquiry found only a small percentage of grocery price increases could be attributed to increased profits made by the major grocery chains and wholesalers.