New pressures on trolley cost
A FRESH wave of price spikes is about to hit Aussie households already struggling with massive increases in fuel costs and higher expenses almost everywhere.
The cost of filling a supermarket trolley has surged in the past year amid pandemic-related supply squeezes, and shoppers are being warned of more rises in the coming months.
However, fuel rather than food is the biggest drain on household budgets after Russia’s invasion of Ukraine sent oil prices soaring, and this inflation will flow through to almost every corner of the economy – with interest rate rises likely by mid-year.
Grocery app Frugl’s analysis of tens of thousands of products at supermarkets Woolworths and Coles has found some huge price surges in the past year, with some food and drink products up more than 50 per cent.
While Australia’s current inflation rate is 3.5 per cent, Frugl Group managing director Sean Smith said the number of supermarket product prices rising more than 5 per cent annually had multiplied.
He said “huge increases” in shipping costs had combined with shortages in key commodities and raw ingredients to increase prices, and natural disasters had affected fresh food.
“As both Ukraine and Russia are major global wheat exporters, we expect bread prices to rise in coming months,” Mr Smith said.
“Increases in some fresh vegetables are already being flagged by retailers of up to 75 per cent – driven by both scarcity and cost of fuel on logistics.
“Other commodities in grocery goods are going to go up as well due to international events – the prices of CO2 in carbonated drinks, the tin used in canning factories.”
A Woolworths spokesman said some prices had changed after wholesale cost increases from suppliers.
“We’ll continue to work with our suppliers to sensitively manage the whole-ofmarket inflationary pressure on food and groceries,” he said.
A Coles spokeswoman said inflation was affecting all retailers but “this financial year we have reduced prices on well over 2000 items across our range of more than 20,000 products”.
Food companies have flagged further price increases, economists predict interest rate rises as early as June, and soaring petrol prices – up
55 per cent in the past year from $1.38 to $2.14 a litre – should remain high.
KPMG chief economist Brendan Rynne said it was going to take until the end of the year for oil prices to fall.
“We are at sustained higher levels of oil costs, which are going to feed their way through to transport costs,” he said.
Those new price increases were starting to come through now, Dr Rynne said.
“It’s going to be the next three months that people will find particularly tough.”
CPI Inflation was likely to rise to about 5 per cent and stay there for the year, Dr Rynne said.