Consumer price index data from the Australian Bureau of Statistics released last week showed grocery prices continued to climb at the end of last year, with food and non-alcoholic beverage prices up 9.4 per cent in the 12 months to November.

The UBS grocery price tracker, which monitors the prices of fresh and dry goods across Coles and Woolworths, shows that the price of dry and packaged grocery items has been rising even as fruits and vegetables start to moderate.

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“Trade feedback indicates that cost pressures remain (for example, supply chains, specific product inputs) and are arguably still rising for dry grocery suppliers, with the expected further cost increases to support dry grocery inflation in early calendar year 2023,” its equities team said in a note.

Economists and supply chain experts said last week that food inflation is likely to moderate later this year, but noted that higher input costs including fuel and fertiliser prices would continue.

Meanwhile, UBS analysts have found that the while consumers still expect spending to remain strong over the next 12 months, those on lower incomes of less than $48,000 are really feeling the pinch as the cost of living rises.

“Low-income earners now expect their income to contract over the coming 12 months, while their
expectations on savings are now the most negative on record,” strategist Richard Schellbach said in a note to clients.

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