Get set to tighten your belt with series of price hikes forecast

Get set to tighten the belt in coming months with news that retailers are set to increase their prices across a wide range of products.

Shoppers are being warned to expect higher prices for groceries, petrol and imported clothing, footwear, furniture, hardware and toys.

The problems are fourfold: supply chain issues, increased demand, floods and labour shortages on Aussie farms.

Farmers are passing higher fruit and vegetable prices onto their customers and supermarkets say the medium-term outlook for grocery prices remains “unfavourable”.

The New Daily reports that Coles’ prices rose 2.4 per cent over 2019-20, while Woolworths’ rose 1.4 per cent, which was faster than wages growth over that period.

Fuel prices have hit a 13-month high with eye-watering prices in the vicinity of $1.64 now common across the country. The hike is attributed to higher oil prices and, again, demand as motorists return to the roads.

Read more: Tradies in short supply and renovation costs soaring

The Australian Financial Review says shipping costs have tripled in the past 12 to 15 months, while prices for commodities and materials ranging from palm oil and PVC to timber, steel and aluminium have soared due to global demand, container shortages, logjams in ports and the recent Suez Canal blockage.

Bernie Brookes, former Myer chief executive and majority owner of accessories chain Colette, says talk about inflation being under control is wide of the mark.

“We’ve got significant increases in shipping costs and significant increases in commodity prices for raw materials,” he says. “No matter what commodity you look at, whether it’s poly or resin or oil or gas, commodity prices are up and a lot of them impact raw material costs.

“It doesn’t matter whether you’re producing furniture or handbags or food, there’s no doubt all those are going to be pressured.

“Labour costs are subdued, but everything else is moving up.”

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Jeff Adams, chief executive of Metcash, which owns the IGA, Mitre 10 and Home Timber & Hardware stores, told the AFR that pricing pressure was most noticeable in hardware and tools as most were imported from China and Europe.

Bunnings managing director Michael Schneider said the chain managed input costs, including freight, very carefully.

“While the current global demand patterns are putting pressure on some freight costs, we’re working with our long-term freight providers and our suppliers to minimise any impacts,” he said. “Our focus continues to be on delivering the value and low prices our customers expect.”

James Sheerin, senior consultant at supply chain company TMX, said more importers and retailers were considering shifting to higher-cost air freight to avoid the risks of ocean shipping. This would, in turn, place more pressure on margins unless retailers raised prices.

The Housing Industry Association has forecast renovation projects to jump by 3 per cent this year due to a shortage of tradies, material supply issues and – you guessed it – demand.

Housing Industry Group head Peter Burn said building prices in March had surged due to a combination of high demand, supply constraints and rising freight costs for imported inputs. New orders had gone through the roof, in part fuelled by the looming cut-offs for the HomeBuilder program.

Is your income keeping pace with higher living costs? Are you ready for another surge in prices?

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Written by Janelle Ward



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