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Grocery items are soaring and there are more hikes to come

·2-min read
Money and food in supermarket
Food costs are rising and are unlikely to get cheaper any time soon. (Source: Getty)

Food costs have been soaring, as confirmed by the latest Consumer Price Index (CPI) figures, with one expert warning more price hikes are likely to follow.

Food prices saw their highest year-on-year increase in the CPI since the September quarter of 2011, when yearly food price inflation peaked at 6.4 per cent.

Rabobank senior food retail analyst Michael Harvey said more food price hikes were expected as the inflationary peak was most likely still to come.

“Consumers still have some headwinds to navigate and higher average food basket costs expected to come,” Harvey said.

Few categories escaped inflationary pressures in the past quarter, Harvey said, with vegetables leading the charge - rather unsurprising given iceberg lettuce reportedly hit $12 each at one stage.

Fruit and vegetables were up 7.3 per cent annually and 5.8 per cent on the previous quarter.

Prices for bread and cereal products were also hit hard, surging 6.3 per cent annually and 3.1 per cent on the March quarter.

Meat and seafood were also up 6.3 per cent annually, but only 0.8 per cent on last quarter.

Dairy and related product prices were up 5.2 per cent annually and 1.3 per cent on the last quarter.

Our takeaway habits have also jumped up in price, with meals out and take-away food costs up 4.7 per cent annually.

Harvey said several factors - locally and globally - were driving food prices skyward, with few signs of slowdown.

“While the effect of the war in Ukraine was evident in high global agricultural commodity prices in the June quarter, an easing in these prices in July will take time to flow on to food markets internationally,” Harvey said.

He said the high costs of labour, energy, freight and packaging were also continuing to hurt food systems.

“And there have been further supply disruptions locally with flooding and unfavourable weather in parts of Australia continuing to impact the availability of fresh produce,” he added.

While there have been some short-term freezes placed on food prices by some retailers - including the major supermarket chains - retailers are likely to come under pressure from recent price increases by food and beverage companies.

“In recent weeks, for example, we have seen some sizeable increases in staple items, like private-label milk,” he said.

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