Australia’s food inflation problem hasn’t gone away, but it has changed shape, with beef prices cooling, pork falling and fruit jumping more than 10 per cent in a year.
“Rather than broad-based inflation across the supermarket basket, we’re now seeing much greater divergence between categories,” said RaboResearch senior food analyst Michael Harvey.
Headline inflation rose 4.3 per cent in the 12 months to September 2026, up from 4.0 per cent in August, according to the latest Consumer Price Index figures. Food and non-alcoholic beverage prices rose 3.2 per cent, up from 3.0 per cent.
“Animal proteins are a good example,” Mr Harvey said.
“Beef remains an inflation hotspot, although price growth has slowed considerably from its peak earlier this year.”
“Beef and veal prices were 5.8% higher year-on-year in September, down from a peak of 13.5% in February.”
“By contrast, pork prices fell 1.3% year-on-year, marking a second consecutive month of price deflation, while poultry inflation was subdued at just 0.4%.”
He said that widening gap mattered for shoppers.
“As household budgets remain under pressure, relative price differences provide a stronger incentive for shoppers to substitute between proteins and seek better value,” Mr Harvey said.
Dairy prices rose 3.5 per cent, led by liquid milk at 5.4 per cent, while cheese was softer at 1.8 per cent, in line with more subdued global cheese markets.
Fruit prices rose 10.2 per cent.
“Fruit prices are inherently volatile and particularly sensitive to seasonal availability and changing supply conditions,” Mr Harvey said.
Coffee, tea and cocoa prices fell 1.0 per cent over the year.
Eating out remains expensive, with meals out and takeaway food up 3.9 per cent, including restaurant meals at 4.1 per cent.
“Foodservice businesses continue to contend with a broad cost base spanning labour, occupancy, energy and ingredients,” Mr Harvey said.
He said there were encouraging signs in global commodity markets, but weather, energy prices and geopolitical uncertainty remained risks heading into 2027.
At home, consumer confidence remains weak. The ANZ-Roy Morgan Consumer Confidence index stood at 67.9 in late October, down 17.9 points on a year earlier.
Mr Harvey pointed to Woolworths’ latest trading update, which showed Australian Food comparable sales up 6.1 per cent, average prices down 0.7 per cent, and own and exclusive brands up 8.5 per cent.
“Grocery spending continues to prove resilient, but price investment, private label and promotional value are becoming increasingly important in determining where that spending goes,” he said.
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