Annual food price inflation eased to 3 per cent in the June quarter, according to the latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS), down from 3.2 per cent in the March quarter.
The slowdown follows the broader overall inflation trend, which dropped to 2.1 per cent year-on-year from 2.4 per cent previously. Out-of-home food service inflation remained steady at 2.7 per cent annually.
Despite the easing, RaboResearch senior food retail analyst, Michael Harvey, said food inflation remains elevated when viewed against historical benchmarks.
“Food price inflation is still running above the 10-year average, indicating persistent cost pressures in the food ecosystem,” Harvey said.
Several key categories are still experiencing significant price hikes. Egg prices soared 19.1 per cent year-on-year, coffee prices rose 9.4 per cent annually and was up sharply from 3.8 per cent in the March quarter.
Lamb was up 12.1 per cent, which was at least lower that the 19.7 per cent rise in the last quarter.
“Consumers are likely to adjust their purchasing behaviour in response to these sharper increases,” Harvey noted.
Fruit and vegetable prices rose 4.6 per cent in the year to June, compared to a 6.6 per cent increase in March, reflecting improved seasonal growing conditions.
Snacking and confectionery costs rose 5.5 per cent over the past year, with manufacturers passing on higher cocoa prices. Milk and cheese prices were stable after two consecutive quarters of decline.
Deflation was recorded in only three categories: cooking oils, cereal products, and seafood. However, Harvey cautioned that cooking oils could soon face renewed upward pressure due to rising global butter prices.
“Butter is included in this category and with Australia being a net importer, local prices are vulnerable to international trends,” he said.
