Jan 31, 2023
Australian Barbecue Index Jumps in Jolt for Households and RBA
(Bloomberg) -- Inflation in Australia shows little sign of abating, with the cost of a summer “barbie” spiraling higher, causing pain to households and concerns for the Reserve Bank as it prepares to meet next week.
Soaring costs of everything from beef to seafood and cheese pushed a new Bloomberg Barbecue Index up 8.2% in the final three months of 2022 from a year earlier. That easily outpaced headline inflation of 7.8% in the period.
Soaring food prices, which account for roughly 17% of the official inflation basket, come after the RBA has raised interest rates by three percentage points between May and December to 3.1%. The central bank is all-but-certain to hike by another quarter-point on Tuesday after strong consumer-price data.
“There has been a general increase in commodity prices across the board over the past year and that feeds into food prices. ,” said Diana Mousina, senior economist at AMP Capital Markets. “Another factor that’s relevant to Australia is the natural disasters that had hit crop production” along the east coast.
“There are some signs that food prices are turning down so the easing will definitely be welcomed,” she added
Indeed, the barbecue index climbed 0.6% on a quarterly basis, reflecting a sharp fall in vegetable prices. While that may suggest a better outlook, the volatility of food prices makes it difficult to draw firm conclusions.
Australia boasts an enviable summer outdoor lifestyle, making grilled sausages, seafood and steak a key part of the nation’s culture. “Crocodile Dundee” star Paul Hogan enticed Americans to holiday Down Under four decades ago by offering to throw a “shrimp on the barbie” for them.
Bloomberg’s Barbecue Index crunches data from the Australian Bureau of Statistics, looking at the prices of key ingredients in the great Aussie barbecue — seafood, beef, lamb, wine, vegetables and cheese. It puts equal weighting on all of the components.
Analysts at UBS Group AG separately monitored 60,000 items on the shelves of Australia’s two biggest supermarkets — Coles Group Ltd. and Woolworths Group Ltd. — and expect prices to keep climbing.
“Food inflation is expected to continue,” Shaun Cousins, Sydney-based analyst at UBS, said in a research note. “Trade feedback indicates cost pressures remain and are arguably still rising for dry grocery suppliers.”
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