Food and grocery retailer Metcash, says most suppliers have sought price hikes

The food and grocery wholesaler stocking thousands of stores across Australia, including IGA supermarkets, says about 60 per cent of its suppliers have sought price hikes amid rising inflation. Metcash unveiled its financial results for the year ended April 30 on Monday and highlighted elevated inflation had continued beyond then. In its review of food trading results, the company said wholesale price inflation had accelerated in the second half of the year, with price hikes received from about 60 per cent of suppliers. Across the year, wholesale price inflation reached 0.5 per cent, the company reported. New group chief executive Doug Jones said the company was looking at different options to curb the impact of the price increases. “We are continuing to work closely with our suppliers and retailers to help shoppers manage the impact of inflation by providing better value options through offering a wider range of products at competitive prices,” Mr Jones said. He said there was “uncertainty over the level of inflation going forward” as well as how the impact of inflation and other cost-of-living increases could affect customer behaviour in Metcash’s retail networks. Headline inflation in the year to March soared to 5.1 per cent – the highest since 2001. The cost of food and non-alcoholic beverages jumped by 4.3 per cent alone between the 2021 and 2022 March quarter, according to the Consumer Price Index. In terms of groceries, the cost of fruit and vegetables grew by 6.7 per cent in the last year, while meat and seafoods increased by 6.2 per cent. Bread and cereal products also increased by 3 per cent, dairy and dairy-related products by 4.1 per cent and other food products by 4.2 per cent. Reserve Bank governor Philip Lowe last week predicted inflation would reach a 32-year high of 7 per cent before the year’s end. Treasurer Jim Chalmers has also warned that inflation would be “significantly higher” than expected. “Inflation will be significantly higher than what was expected in the last government’s most recent budget – what was expected at election time as well,” Dr Chalmers told ABC’s Insiders program on Sunday. “Certainly higher than the 5.1 per cent we saw in the March quarter. This inflation problem will get more difficult. “We will do the work between now and July to give people the most accurate assessment of where we think this inflation challenge is heading.” Dr Chalmers said he would provide an update on inflation to the parliament when it resumes next month ahead of the October budget. Supply shortages have pushed prices of grocery items such as lettuce to as high as $11.99 each in some Australian states in recent weeks on the back of poor growing conditions. And online marketplace eBay reported a tripling in the sales of lettuce seeds in the last month as people looked to bypass the supply issue and grow their own. Others have poked fun at the extreme prices by flogging lettuce leaves online for astronomical prices. In a speech to the American Chamber of Commerce in Australia last week, Dr Lowe said Australia was no exception to the general inflation trend, although it was below that of most other advanced economies. He said global factors, such as the interruption of supply chains during the pandemic and Russia’s invasion of Ukraine that caused major disruptions to global markets for energy and food all contributed. But domestic factors were also increasingly at play, including Australia’s strong recovery from the pandemic and growth in domestic spending testing the ability of the economy to meet demand for goods and services. “Not surprisingly, this pressure on domestic capacity has led to a broadening of inflation pressures in Australia,” Dr Lowe said. Inflation is not forecast to decline towards the central bank’s target of 2 to 3 per cent until 2023.