The consumer price index recorded its largest quarterly and annual rise since the introduction of the GST 22 years ago, with food and beverage manufacturing one of the hardest hit sectors, the Australian Bureau of Statistics says.
The March quarterly figures showed CPI rose 2.1 per cent in the quarter and 5.1 per cent for the year to March, with housing, fuel, and tertiary education major contributors.
Food and groceries recorded notable rises, with the sector rising 2.8 per cent due to high transport, fertiliser, packaging and ingredient costs, as well as Covid-related disruptions and herd restocking.
ABS head of Prices Statistics Michelle Marquardt said, “The rise for the food group was softened by voucher programs in Sydney and Melbourne, which reduced out of pocket costs for meals out and takeaway foods. The grocery component of the group, which excludes meals out and takeaway foods, rose 4.0 per cent in the March quarter,” Marquardt said.
Last week, the Australian Food & Grocery Council (AFGC) said manufacturers could no longer absorb increased costs that have been exacerbated by the pandemic and geopolitical instability.
AFGC CEO Tanya Barden said cost pressures on Australian food and grocery manufacturers are starting to flow through to supermarket shelves.
“Over the past decade manufacturers have already been dealing with a situation where wholesale prices – the prices they receive for their goods – have risen by less than the cost of their inputs. There has been a lot of absorbing of costs by manufacturers before the impact of the pandemic,” Barden said.
The latest ABS figures show major contributors to the rise in food prices were: vegetables (+6.6 per cent), waters, soft drinks and juices (+5.6 per cent), fruit (+4.9 per cent) and beef (+7.6 per cent). Non-durable household products like toilet paper and paper towel also rose +6.7 per cent.
Fruit and vegetable increases were due to Covid-related supply chain disruptions, and high transport and fertiliser costs. Flooding in production areas of New South Wales and Queensland also disrupted supply in early March, which put additional pressure on vegetable prices late in the quarter, the ABS said.
Meat and seafoods rose 4.8 per cent due to herd rebuilding in response to favourable weather conditions, reducing supply. Supply chain disruptions and high transport costs also contributed to the rise.
Waters, soft drinks and juices rose 5.6 per cent due to packaging, ingredient and freight costs pressures.
Ten of the 11 categories tracked by the ABS recorded price growth in the quarter.
AMP chief economist Shane Oliver tweeted: “The proportion of Australian CPI components with a greater than 3 per cent yoy price increase has jumped to 56 per cent, still well below the US though which is at 79 per cent (and where inflation is 8.5 per cent yoy).”
