Few economic phenomena affect daily life as viscerally as food inflation. When the price of staples like bread, eggs, and vegetables rises sharply, it is impossible to ignore.
Australia's food price inflation has been driven by a confluence of factors: energy cost pass-through, labour shortages in food processing and agriculture, and disruptions to global supply chains.
The Energy Cost Channel
Food production is energy-intensive at every stage — from fertiliser manufacture to refrigerated transport. The sharp rise in energy prices worked its way through the supply chain with a lag.
When Does It End?
The good news is that global food commodity prices have retreated substantially from their 2022 peaks. Our analysis suggests grocery price inflation will moderate to near 2 per cent by mid-2025.
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