Thursday, May 05, 2011

Inside your grocery cupboard: Inflation, but not as you know it

Milk (2 litre whole) down 62 cents, $3.11
Eggs (dozen free range) down 22 cents, $5.26
Breakfast cereal (750g) down 11 cents, $3.85
Bread (700g sliced) down 8 cents, $3.71
Baked beans (420g can) down 5 cents, $1.45

Bananas (1 kilo) up $2.84, $5.39
Tomatoes (1 kilo) up 40 cents, $5.67
Tomato sauce (600 ml) up 22 cents, $2.09
Onions (1 kilo) up 21 cents, $3.23
Butter (500g) up 11 cents $4.36

Average Sydney prices, March on December quarters

If you want a handle on the confusing currents and counter currents driving inflation, go through your grocery cupboard.

The detailed price records collected by the Bureau of Statistics in the three months to March show the milk discount war and the soaring Australian dollar aggressively driving down the prices of shelves worth of staples while the floods and climbing commodity prices play havoc with others.

The average price paid for a two litre bottle of full cream milk in Sydney fell 62 cents between the December and March quarters to $3.11 -- a substantial cut, but a long way shy of the $1.99 being charged by Coles and Woolworths, in part because we are continuing to buy milk from other outlets and in part because the lower price didn’t apply for the full three months.

Free-range eggs, also discounted by Coles, fell in price 22 cents to $5.26 per dozen.

The soaring dollar pushed down dozens of other prices and shielded still more from the full affect of climbing international prices...

The average price of a box of breakfast cereal fell 11 cents to $3.85. A can of baked beans fell 5 cents cheaper to $1.45. Although these products are often made in Australia, they are subject to downward price pressure from international competition.

The average banana price recorded by the Bureau was $5.39 per kilo, up an extraordinary $2.84, but well short of the $12 per kilo many Sydneysiders are paying because the bureau averaged prices over the entire three months.

The average price of a kilo of onions climbed 21 cents, tomatoes 40 cents and tomato sauce up 22 cents to $2.09 for a 600 ml bottle.

Products derived from commodities caught up in the world-wide economic recovery climbed in price despite the restraining influence of the dollar.

Instant coffee climbed 18 cents to $7.81 per 150 gram jar and milk chocolate climbed 10 cents to $3.78 per 200 gram block. Sydney petrol climbed 11 cents per litre to $1.38 with the price higher at the end of the quarter than at the start.

The cross currents paint a picture of building inflationary pressure held back for the moment by the climbing Australian dollar and supermarket discounting. With milk and eggs unlikely to discounted further and with the dollar likely to soon find its top they suggest higher inflation in the year ahead partly offset by the unwinding of flood-affected fruit and vegetable prices.

Published in today's SMH

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