Get all your news in one place.
100’s of premium titles.
One app.
Start reading
ABC News
ABC News
Business
Emilia Terzon

Price rises are hitting consumers as inflation takes off. These are some items that are going up now

Stallholders at Queen Victoria Market are worried the price of bread could go from $5 to $10 due to wheat supply issues linked to the war in Ukraine. (ABC News: Emilia Terzon)

Inflation is back in the headlines and, for many Australians, rising prices are a concern.

Soaring fuel costs amid the war in Ukraine — flowing through to freight charges — and Australia's devastating floods are adding to issues with transport and logistics issues already evident during the pandemic.

That's leading to talk of price spikes at many levels, including with one of the most basic necessities: food.

Here are some retailers already experiencing this.

Greengrocer braces for April price hike

Rocco Tripodi has been selling fresh fruit and vegetables at Melbourne's Queen Victoria Market for years.

Rocco Tripodi has just been notified about another price rise by his suppliers from April 1. (ABC News: Michael Barnett)

In recent weeks, he's lifted the price of a punnet of strawberries from $2.50 to $3.00 – and then again shortly after from $4.00 to $5.00.

Fresh green beans have also soared in a similar space of time, by around 30 per cent, to $15.99 a kilogram.

While fresh produce prices often move seasonally, Mr Tripodi describes what he is seeing right now as "pretty concerning".

"It's disturbing, as we need to pass those costs on, and a lot of our customers are price-sensitive as well. It makes it hard for them," he says.

"There's a number of reasons. Shortage of labour, the cost of fuel, the recent floods."

Rocco Tripodi is worried the price of greens will rise further as the recent floods impact supply. (ABC News: Emilia Terzon)

ANZ economists recently factored the Australian floods into their next inflation forecast, because it both hit the supply of produce and disrupted logistics across a number of services. However, they say this hit will be temporary.

Adding to existing pressures on supply chain

Another long-term market stallholder is hearing talk about rising wheat prices.

That is another global commodity that has been disrupted by the war in Ukraine.

Both Ukraine — and the nation that invaded it, Russia — are major exporters of the crucial ingredient.

The bread that Mary-Jane Caiafa's stall sells is made from Australian wheat, also a major player in the market.

However, her suppliers are rumbling that there could be a rise in the cost of making bread and pastries locally.

QVM stallholder Mary-Jane Caiafa is worried that rising wheat prices will impact the price of her bread and pasta. (ABC News: Michael Barnett)

"We're worried a loaf of bread could go from about $5 to about $10," Mary-Jane Caiafa says.

"It's pretty daunting."

Her family business also sells imported goods at its stall, such as chocolate and pasta. Imported goods have also been battling logistical issues and freight cost rises throughout the pandemic.

"Chocolate that was $2.95 last year is now $4.95 this year," she says.

The price of discretionary items — luxuries that not everyone can afford — have not been rising as quickly as non-discretionary items such as fuel, food and housing.

Kuwaii's Geordan Dragos says the price of the local label's signature pants has just risen for the first time in 10 years. (ABC News: Emilia Terzon)

One Australian label that makes its clothes here, Kuwaii, has just lifted the price of its signature pants for the first time in 10 years. They've gone from $289 to $299.

That's partially due to the rising cost of fabric and getting other materials into the country.

"The cost of production, raw materials and shipping have all increased," store manager Geordan Dragos says.

"We had held on for as long as we could but the price needs to go up."

What about in supermarket aisles?

Major supermarket chains are historically less likely to pass on price spikes because their supply chain networks are larger and, therefore, more able to absorb them.

Prices of berries are rising after the floods. (ABC News: Emilia Terzon)

However, in recent weeks, the boss of Woolworths, Brad Banducci, flagged that shelf prices overall could rise 2 to 3 per cent.

"Woolworths has increased some of its retail prices on red meat and packaged grocery lines following wholesale cost increases from its suppliers," a statement from the company this week said.

Coca-Cola did not respond to queries about whether it has risen the prices it charges stores, however one customer member told the ABC that they had just noticed its iconic fizzy drink had gone from $2.00 to $2.20.

Woolworths noted some items were still staying low, such as avocados and chicken. 

Smaller supermarket chain Ritchies IGA has also warned this week of a 75 per cent price spike on some fresh fruit and vegetables due to the floods, as well as a shortage of frozen food. It says this hike could last months.

And manufacturer SPC made headlines this month when it announced a rare rise in the cost of its tinned goods. 

The Victoria-based company says this is due to rises in fuel costs, wheat prices and even the cost of tin on commodity markets.

That could see an average tin of baked beans go from $1.70 to $2.20.

Even the Reserve Bank's governor, Philip Lowe, noted this week that this sort of talk from the majors was unusual.

"The question that we're grappling with is if inflation psychology has shifted," he said.

"Because, in the past decade, it was pretty unusual to see a businessperson go out in public and say, 'We're putting up our prices'. In fact, they were kind of embarrassed about putting up prices."

What is happening behind the scenes?

As well as shortages in supply during the floods — and rising logistical costs — companies that deliver food in Australia are grappling with the recent surge in fuel prices.

The national average for unleaded hit $2.12 last week. Diesel was up further, to $2.21.

That's slightly better than the even higher prices they hit a few weeks ago after the price of Brent crude soared beyond $US100 a barrel on the war in Ukraine.

Rising fuel prices obviously hurt consumers at the bowser but there are many other ways this can eventually hit our wallets.

John Di Losa owns a freight company that delivers refrigerated food to major supermarkets and takeaway retailers.

The fuel surge has seen a doubling in the cost of filling up a truck to deliver food from Cold Xpress' Melbourne hub to regional Victoria's Mildura.

Mr Di Losa hopes this is just a temporary blip but, for now, he's had to raise his fuel surcharge to suppliers from 13.5 per cent to 35 per cent for the next month.

"We have to pass that cost onto our customers, our customers pass it onto the store, and eventually, the customer pays for it," he says.

John Di Losa is the chief executive of Cold Xpress. (ABC News)

Expand that sort of supply pressure throughout the entire supply chain — from farmers' costs through to delivery — and it's not hard to see why ANZ is factoring these fuel hikes into Australia's next round of inflation data.

"Some sectors are very reliant on both oil and gas as an input into production," ANZ economist Catherine Birch says.

"So that will be increasing their costs dramatically.

"And this is where we might see some of these second-order effects, where businesses start to pass on these higher input costs to consumers in the end, and that's where we experience it as higher prices.

Ms Birch points out that petrol did dip during the pandemic — because transport was hindered — and that is, partially, what we are experiencing now: a rebound in demand.

As economies come out of lockdown, that has been the case for many other elements of the supply chain besides fuel.

What does this mean for shoppers?

Across Australia, inflation was 3.5 per cent last year, while the average weekly wage increased only by 2.3 per cent. Price inflation, without matching wage rises, means most people fall behind.

The Reserve Bank has been trying to lift inflation during the pandemic to stimulate the economy, however now economists are predicting that CPI will rise too much over the next quarter.

ANZ said, overall, inflation could rise to 5 per cent in the next quarter, or 3.75 per cent if you take out the outsized price moves — a measure called trimmed inflation.

"We assume these inflationary effects, particularly via petrol and food prices, will unwind from the second half of 2022," it states.

Ms Birch says many Australians will be sheltered from too much bill shock because they have accumulated savings during the pandemic, and still are not spending quite as much on discretionary items such as travel.

Yet she's concerned for lower-income households that aren't getting wage rises, and don't have space in their budget to simply cut down on non-essentials for now.

"Households are getting that double whammy of prices rising more quickly than their wages," she says.

Ann Schroders is a pensioner who is already incredibly conscious of her budget.

"I have to watch what I'm buying. If I don't need it, I don't buy it," she says.

She's worried about the basics – eggs, meat and bread – going up.

"I do without. I occasionally have an apple," she says.

Ann Schroders (left) and her daughter, Lis Bailey, are worried about rising food prices and the cost of petrol. (ABC News: Michael Barnett)

Her daughter, Lis Bailey, is also worried about rising fuel prices. She's a carer, while her husband works part-time.

"And his wages haven't gone up for the last three years," Lis says.

Both mother and daughter say recent rises to the carer's allowance and the pension do not help them stay ahead right now.

"The economy has been moving forward but we're not," Lis says.

Speaking this week, the Reserve Bank's Philip Lowe did say that he expects concerns about price rises to be short-term.

"For us to view a world where inflation stays high, you've got to have these prices keep going up at the rate as they've gone up, which they're very unlikely to do," he said.

"Or wages growth picks up and is much higher and sustained at a higher rate."

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.