Food price inflation has continued to moderate, according to the latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS).
The November 2023 data showed that prices for food and (non-alcoholic) beverages had risen 4.6 per cent annually, which was down on the 5.3 per cent rate of annual inflation in this category posted in October 2023, and well below the peak of annual food price inflation of 9.6 per that was seen in September 2022.
Michael Harvey, Senior Food Retail Analyst at RaboResearch, said red meat and fish produce saw annual inflation of less than 1 per cent, which is welcome news for Australian consumers as they are important categories in household budgets.
“More sticky inflation was evident in key packaged food categories, such as dairy and bakery, but the good news is there is less ‘sticker shock’ for consumers in these categories as well, with the rate of inflation also moderating and actually at the lowest level since mid-2022.”
Harvey said that Rabobank saw agricultural commodity prices broadly remaining range-bound at lower price levels through 2024, and this would be “welcomed by consumers as it has been a leading cause of higher food prices”.
However, recent rainfall and flooding reinforce the risk to local food supply and prices from unfavourable impacts of adverse weather conditions, particularly across horticulture and fresh produce.
“Unfavourable weather during key growing periods can affect quality and disrupt supply, leading to upward pressure on prices,” said Harvey.
Harvey explained that margins in the food supply chain were also improving ‘downstream’ for food companies on the back of weaker agricultural commodity prices and easing food processing and distribution costs.
“And with this, we are seeing a sharpened focus from food and beverage companies to tailor products to a value-conscious consumer. And this will be a key theme through 2024 as cost-of-living pressures continue to influence purchasing behaviour.
“We will get a deeper dive look into the food basket when the December quarter CPI results are released on January 31.”