© Reuters. FILE PHOTO: A customer reaches for a bag of garlic, that is imported from China, next to a container of Asian shallots from Australia at a fruit and vegetable shop in Sydney, Australia, June 6, 2016. REUTERS/David Gray
SYDNEY (Reuters) – Australia’s top grocer said on Tuesday that while the food inflation rate was beginning to decline, prices were taking longer than expected to retreat off pandemic highs.
Woolworths Group Ltd Chief Executive Officer Brad Banducci said while price rises were slowing for certain products, with vegetables now “deflationary”, prices elsewhere were falling more slowly or not at all.
“We’ve seen food inflation in aggregate come down but much more slowly than anyone anticipated,” Banducci said at the Australian Financial Review business summit on Tuesday in Sydney.
Food inflation rose 9.2% in the December quarter versus a year ago, the highest reading since 2006. Vegetable prices rose 5.7% over the same period, down from a 17.2% reading in the September quarter.
Stubborn inflation has posed a challenge for the Reserve Bank of Australia, which on Tuesday lifted its cash rate to its highest level in more than a decade. However the central bank suggested it might be nearly done tightening as consumer spending was slowing.
Falling freight rates would help lower prices, said Banducci, adding that Woolworths had just negotiated new freight agreements.