Food inflation: How fuel prices will affect regional Australians

A rise in food inflation could put regional Australians at risk of food insecurity, with costs forecast to rise in coming months.

Regional Australians could be vulnerable to food inflation, as the cost of food and groceries are expected to rise.

Consumers can expect to pay more for grocery staples such as meat and dairy in coming weeks, as the food supply chain factors in rising fuel costs and ongoing global volatility triggered by Russia’s invasion of Ukraine and the pandemic.

The rise in food inflation could put regional Australians at risk of food insecurity.

A Trading Economics report showed annual food price inflation rose almost 2 per cent in the December quarter, the highest rise since 2020.

Prices rose the fastest for oils and fats, dairy products, and food products.

On the dairy front, Woolworths, Coles, and Aldi are charging $1.30 a litre for their respective generic milk brands after a modest pre-Christmas price rise.

United Dairyfarmers of Victoria president Paul Mumford said fuel and fertiliser costs were expected to have an effect on the cost of dairy, and retailers and processors would need to explain to consumers the reasons for the dearer dairy products.

Paul Mumford, president of United Dairyfarmers of Victoria, said processors and retailers will need to explain increased costs to consumers.

“It shouldn’t just be the job of farmers to relay that message. We’ve not only got rising fuel costs to deal with but fertiliser is far more expensive now and labour shortages mean cost pressures are there too.”

Food Bank chief executive Dave McNamara said by nature, people living in regional areas are already vulnerable, as they often live in isolated, remote areas.

“I grew up in a small town, my mum used to have to travel a great distance to buy food for the family, because there wasn’t the availability,” Mr McNamara said.

”When you look at some of the compounding effects you add on top … rising fuel costs, it makes it much more difficult to get the food, and it’s much more expensive.”

Mr McNamara said the cost of more affordable staple items, such as canned goods, were also at risk of surging in value, with the potential to push more people into food insecurity.

“The food we’re trying to get (imported from Italy) … if it’s currently 50 cents a can, for example, you’re going to have to be paying about a dollar, so that’s a doubling of our wholesale cost to get it into the country,” Mr McNamara said.

“So if we’re feeling it, I can only imagine how others are going to start feeling it.”

Rabobank senior analyst Michael Harvey said while food prices were expected to rise in coming months, historically food inflation was “quite muted”.

“What we’ve seen recently are increases in the cost of food at the retail end. Meat has also been the main one, but there’s been some in the dairy case as well. We’ve actually got deflation on fresh produce, with really strong production of fresh produce and soft pricing,” Mr Harvey said.

“It’s a mixed bag.”