Rabobank, Media Release, 26 July 2023

The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics, released on 26 July 2023, shows food inflation slowing in the June quarter.

Rabobank senior food retail analyst Michael Harvey said “Food inflation is at 1.6 per cent for March to June (unchanged from the last quarter), and 7.5 per cent year-on-year – slowing down from last quarter at 8 per cent”.

Mr Harvey said high input/production costs are still fuelling food inflation – both for restaurants and grocery shopping.

“Restaurant meals inflation has slowed down in the last quarter to 6.5 per cent, down from seven per cent previously,” he said.

“Effects of wet weather are still playing a part in food and vegetable inflation,” Mr Harvey said, “with reduced supply for some fruit and vegetables, however, this is also being balanced out by good weather conditions in some growing regions leading to abundant supply of certain vegetables like, capsicums and avocados.”

Mr Harvey said snacks and confectionary inflation has increased from March year-on-year figures, “This is driven by increased costs of production and price rallies in inputs, like sugar and cocoa. While food inflation is on the decline, consumer’s favourite indulgence categories – ice cream, snacks and confectionary – have seen increased inflation.

“Most other food categories have seen inflation rates decrease, which shows we are well passed the food inflation peak, but still well above long term averages.

“It still remains a challenging market for consumers as inflation rates for many categories still remain in double digits and there remains a clear trend towards value as households look to tighten spending,” Mr Harvey said.

“For many categories we are at the later stages of the inflationary cycle, but the outlook for the rest of the year will remain dependant on growing conditions in Australia – considering risks such as El Nino – as well as global commodity markets.”