Supermarket price survey 2009

Our national survey reveals the true price we pay at the supermarket
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05.Australian food inflation

Changes-in-Avg-Price-tableHeadline 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.



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Australia's soaring prices

Whatever the cause, there’s little doubt food prices in Australia have increased significantly in recent times. Australia has the tenth-highest food inflation of 30 OECD countries for the year to September. We may not be the worst off, but we’re unique among many OECD countries for having a rate of food price inflation that’s been consistently above our overall inflation over the last 10 years. There are limitations in making international comparisons due to differences in exchange rates, the role of tax in food prices, shopping behaviour and so on. But comparisons with New Zealand, considered reasonable given the similarities between our countries, show Australian food price increases are substantially higher than across the Tasman.

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