Food prices rise 3% - but what's really driving prices at the checkout?
Distributed by Lanham Media on behalf of Box Divvy
As Australian food prices rise 3% over the past year, community food network Box Divvy is questioning what is driving higher prices at the checkout, saying it is not seeing broad-based increases in the cost of food from its suppliers.
New inflation figures released today show food and non-alcoholic beverage prices rose 3% in the 12 months to August, yet Box Divvy’s own prices are telling a very different story.
Its latest price analysis, based on the foods included in CHOICE’s supermarket price comparisons, found Box Divvy prices across the full comparison rose just 0.5% over the past year. For the basic foods included in CHOICE’s comparison, Box Divvy prices actually fell 4% over the year and 2% over the latest quarter.
Box Divvy co-founder Anton van den Berg said the organisation was not seeing broad-based increases in the cost of goods that would explain the level of price rises consumers were seeing at supermarket checkouts.
“We’re simply not seeing broad-based increases in our cost of food. Demand is generally weak, and that is keeping a lid on prices at the farm gate, not only in fruit and vegetables but also in meat.
“If the underlying cost of food isn’t rising across the board, then we think consumers have every right to ask what else is driving prices higher at the checkout, and how much of what they pay is actually getting back to farmers and suppliers.”
The difference can be seen across a number of everyday foods. Box Divvy’s beef mince is around 9% cheaper than it was a year ago, while chicken breast is around 10% cheaper. Box Divvy expects chicken breast prices to fall by a further 8–9% in early October due to strong supply and weak demand.
Mr van den Berg said individual food prices would always fluctuate according to seasonality, weather, supply and demand, but Box Divvy’s experience raised a broader question about how changes in the underlying cost of food flowed through to the price consumers ultimately paid.
“When inflation rises, there can be an assumption that higher prices at the checkout simply reflect higher costs all the way through the supply chain. Of course there are genuine cost pressures at times, but what we’re seeing suggests that isn’t always the whole story.
We saw during COVID how quickly expectations of higher prices became part of the conversation around food, and we need to be careful we don’t talk ourselves into the same situation again. Inflation shouldn’t become an automatic justification for prices continuing to rise. If our costs are stable or come down, our members should see that reflected in what they pay.”
The questions come after the Australian Competition and Consumer Commission’s Supermarkets Inquiry found ALDI, Coles and Woolworths were among the most profitable supermarket businesses compared with international peers, while their average product margins had increased over the previous five financial years.
The inquiry also recommended greater transparency around supermarket pricing, promotions and supplier arrangements. Box Divvy adopted price transparency several years ago, giving members visibility of both the supplier price and the final price they pay.
Since 1 July this year, Coles and Woolworths have also been subject to new excessive pricing rules – designed to prevent practices commonly described as price gouging – with the ACCC considering factors including the cost of supplying a product and what constitutes a reasonable margin when assessing whether a price is significantly excessive.
“Australians have every reason to be frustrated. This week the cash rate rose again to its highest level in 15 years as the Reserve Bank continues to fight inflation, while households are already dealing with higher prices at the checkout. Inflation shouldn’t become an automatic justification for prices continuing to rise. If our costs are stable or come down, our members see that reflected in what they pay.”
Free to join, Box Divvy is a rapidly growing community food network with over 400 Hubs and 16,000 members across NSW, ACT, Victoria and Queensland. Members order fresh produce, meat, groceries and other foods through a three-day ordering cycle before collecting from a local community Hub, typically run from a home or garage by a local person who coordinates the weekly collection. The network continues to grow as more people look for alternatives that address cost-of-living pressures, food security, sustainability, fair returns for farmers and stronger local communities.
ENDS
Distributed by Lanham Media on behalf of Box Divvy
Media contacts:
Greg Townley | [email protected] | 0414 195 908
Fleur Townley | [email protected] | 0405 278 758
Media opportunities and resources:
- Box Divvy co-founder Anton van den Berg is available for interview.
- Full price comparison and workings available here
- Media assets available here
- Box Divvy members and local Hub leaders available on request. Check locations here