Supermarket prices – Michmutters
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Grocery prices: Free lychees send shoppers into frenzy at Sydney’s Paddy’s Markets

Footage of shoppers in a frenzy after free fruit was offered at bustling Sydney market has perfectly summed up Australia’s cost of living crisis.

Data released by the Australian Bureau of Statistics showed the price of groceries is up 5.3 per cent annually and it is expected to rise further.

Fruit and vegetable prices were up 6.7 per cent, with some products — including staples like lettuce — soaring to ridiculous prices amid shortages.

So when lychees were on offer at the CBD’s Paddy’s Market, it led to dozens of shoppers clamoring over crates to get their fix.

It came as new research revealed supermarkets are forcing many people to overspend, costing households an extra $1,200 each year.

A survey of more than 2000 Australians found about two in five people frequently overspend their food budget and 82 per cent now splurge up to $200 on their weekly grocery shop.

The research, conducted by meal kit delivery service HelloFresh, also found 71 per cent of respondents were worried food items would continue to become more expensive.

Last month, Red Rich Fruits Managing Director Matthew Palise said rising prices have been brought on by a “perfect storm”.

Rising fuel prices, a tripling of fertilizer costs and a countrywide labor shortage have both hit farmers hard as competition ramps up.

A torrential rain season on the east coast — and general disruption from the pandemic — have also contributed to skyrocketing prices.

Mr Palise said they are currently selling off mandarins for between $2.50-$3.50 per kilogram, and has recommended shoppers on a budget go for what’s in season.

Mr Palise said sweet potato, onions, pumpkin and pink lady apples are currently some of the best value for money fruit and veg at the moment, but also reassured the market would ease going into the warmer months.

“You’ll see an easing into spring, especially on the higher priced produce like berries,” Mr Palise told news.com.au in July.

“It won’t go back to pre-pandemic prices, but there is relief on the way.

“My advice to shoppers is to buy local, spot the specials.”

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Business

Cost of living: Inflation bites as vegetable and fruit prices rise, pork drops

There’s a place that gives me the shivers: And not just because it’s cold. The fresh section of the supermarket has become terrifying.

I’m not frightened of the vegetables themselves. What’s different is the numbers on the price tags. They suddenly make vegetables look like luxury goods.

The latest consumer price inflation figures are out and they tell a shocking story.

As the next chart shows, the price of vegetables has gone supernova. It’s hardly the only product to have shot up. Your breakfast cereal and the sandwich in your lunch box are also much more expensive than before. Only one product category fell in price in the most recent data: pork.

The price of vegetables went up a lot between March and June this year because in winter, we get our veg from Queensland, and the state got flooded in March. Fields that would usually be full of happy young lettuces were instead knee-deep in filthy floodwater.

The basic law of economics says when things are in short supply, the market starts raising prices. Only buyers who really want something – and who can afford it – are left buying. The rest of us stop buying. This is what markets do – change prices to make sure demand equals supply. Sometimes that means raising prices a lot to scare off most buyers.

I was definitely put off buying my favorite fresh vegetables by high prices. I bought frozen veg a few times, and even bought brussels sprouts instead of broccoli at one point – talk about desperate times!

The price of fruit

Fruit was up by a lot in the three month period too. It rose 3.7 per cent, which is significant. Berry crops got hit by bad weather too. But fruit inflation would have been a lot higher if it wasn’t for avocados. Those guys have their seed on the inside, so they count as fruit, and they have tumbled in price. Who among us hasn’t shoveled in a lot of guacamole in recent times?

Avocado farmers seem to have gone on a planting spree back when jokes about smashed avo were at their peak. It takes five years or so for an avocado tree to grow enough to make fruit, and now the farmers are pulling in massive crops. Jokes about smashed avocado are over in 2022 however, and in a grim irony, it’s avocado prices that are now toast.

“The additional [avocado] trees started producing fruit around the middle of last year, leading to oversupply and sharp price falls,” said a spokesperson from the ABS when I asked about why fruit prices were not as high as vegetables.

She explained avocados are often eaten in cafes and restaurants, so when we eat at home more the avocado industry takes an extra hit.

“Reduced demand from the food service industry due to lockdowns also reduced demand for avocados during the later parts of last year,” she said.

That adds up to cheap avocados. I bought a bagful yesterday for well under a dollar each.

Pork on your fork

The outlier in the graph above is pork. Why is it cheaper, I asked? The answer seems to be cheap imports. I went digging for data and found the Australian pork industry published loads of information on pork imports. They say that by May 2022 we had brought in a lot more pork – 22,000 tonnes instead of 13,000 tonnes by May 2021. Our extra bacon is especially coming from Denmark and the Netherlands.

That extra supply has helped eased prices after a period early in 2022 where pork prices got a lot higher.

But why are the Europeans suddenly sending us so much pork? The answer is a fascinating one – pigs don’t graze grass like cows – you have to feed them (not unlike people!) and as the next chart shows, the cost of feed as a percentage of the eventual price of the pig got very high in early 2022.

Pig farmers have the choice to either make money by turning pigs into bacon, or spend money keeping on feeding them. They are choosing the former. So ironically, high food prices in Europe may be helping keep down the price of Australian pork.

Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.

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