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Food prices are expected to ease next year

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Coles Group CEO, Steven Cain has indicated that fresh food inflation will ease in the second half of this financial year, with iceberg lettuce prices already dropping to $3. 

Following floods in Southeast Queensland earlier this year, a reduced supply of iceberg lettuce meant that consumers were paying $10 or more per head. 

While fresh produce prices are easing, Cain expects increases for packaged goods – especially those that rely on global commodities. 

“There tends to be a bit more of a lag in grocery and packaged products because they have longer lead times (for price increases),” Cain told the Australian Financial Review. 

“As long as we don’t get any flooding or bushfires of significance then there is going to be a lot of products coming from farms, which will lead to lower prices, which is good news for everybody.” 

According to Tanya Barden, CEO of the Australian Food & Grocery Council (AFGC), the price of inputs for making and distributing goods has risen over the past few years. 

“The cost of shipping ingredients and finished goods to Australia has risen by 500 to 700 per cent,” she commented earlier this year. “There have also been significant costs to business as a result of COVID safety measures, domestic freight cost increases caused by weather disruptions, shortages of pallets and rises in the cost of packaging.  

“Adding to this unprecedented COVID disruption, manufacturers are facing increases in global commodity prices as a result of the situation in Ukraine and they are now seeing increases in labour costs.” 

Cain recommended high immigration to counter inflation. At the Jobs and Skills Summit next week, a focus on improving migration settings will be discussed. 

“Obviously, there’s inflation around, but there’s no doubt that we’re not maximising the potential of the Australian economy,” Cain told the Australian Financial Review. 

“We need more skilled and unskilled people to do all the jobs that need doing at the moment, otherwise it will drive further inflation.” 

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