The food and grocery wholesaler stocking thousands of stores across Australia, including IGA supermarkets, says about 60 percent of its suppliers have sought price hikes amid rising inflation.
Metcash unveiled its financial results for the year ended April 30 on Monday and highlighted elevated inflation had continued beyond then.
In its review of food trading results, the company said wholesale price inflation had accelerated in the second half of the year, with price hikes received from about 60 percent of suppliers.
Across the year, wholesale price inflation reached 0.5 percent, the company reported.
New group chief executive Doug Jones said the company was looking at different options to curb the impact of the price increases.
“We are continuing to work closely with our suppliers and retailers to help shoppers manage the impact of inflation by providing better value options through offering a wider range of products at competitive prices,” Mr. Jones said.
He said there was “uncertainty over the level of inflation going forward” and how inflation and other cost-of-living increases could affect customer behavior in Metcash’s retail networks.
Headline inflation in the year to March soared to 5.1 percent – the highest since 2001.
According to the Consumer Price Index, the cost of food and non-alcoholic beverages jumped by 4.3 percent alone between the 2021 and 2022 March quarter.
In terms of groceries, the cost of fruit and vegetables grew by 6.7 percent in the last year, while meat and seafood increased by 6.2 percent. Bread and cereal products increased by 3 percent, dairy and dairy-related products by 4.1 percent, and other food products by 4.2 percent.
Camera IconThe cost of fruit and vegetables grew by 6.7 percent last year. NCA NewsWire / Andrew Henshaw Credit: News Corp Australia
Last week, Reserve Bank governor Philip Lowe predicted inflation would reach a 32-year high of 7 percent before the year’s end.
Treasurer Jim Chalmers has also warned that inflation would be “significantly higher” than expected.
“Inflation will be significantly higher than what was expected in the last government’s most recent budget – what was expected at election time as well,” Dr. Chalmers told ABC’s Insiders program on Sunday.
“Certainly higher than the 5.1 percent we saw in the March quarter. This inflation problem will get more difficult.
“We will work between now and July to give people the most accurate assessment of where we think this inflation challenge is heading.”
Dr. Chalmers said he would update the parliament on inflation when it resumes next month ahead of the October budget.
Camera Icon Treasurer Jim Chalmers has warned that inflation will be significantly higher than expected. NCA NewsWire / David Geraghty. Credit: News Corp Australia
Supply shortages have pushed prices of grocery items such as lettuce to as high as $11.99 each in some Australian states in recent weeks due to poor growing conditions.
And online marketplace eBay reported a tripling in the sales of lettuce seeds in the last month as people looked to bypass the supply issue and grow their own.
Others have poked fun at the extreme prices by flogging lettuce leaves online for astronomical prices.
Camera Icon Some have poked fun at the price hikes with online sales like this. Source: Facebook Marketplace Credit: News Corp Australia
In a speech to the American Chamber of Commerce in Australia last week, Dr. Lowe said Australia was no exception to the general inflation trend. However, it was below most other advanced economies.
He said global factors, such as the interruption of supply chains during the pandemic and Russia’s invasion of Ukraine that caused major disruptions to international markets for energy and food, all contributed.
But domestic factors were also increasingly at play, including Australia’s strong recovery from the pandemic and growth in household spending testing the ability of the economy to meet the demand for goods and services.
“Not surprisingly, this pressure on domestic capacity has led to a broadening of inflation pressures in Australia,” Dr. Lowe said.
Inflation is not forecast to decline towards the central bank’s target of 2 to 3 percent until 2023.