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Rabobank commentary: Headline CPI sequentially increased in the December 2022 quarter

The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics, released today, shows headline CPI sequentially increased in the December 2022 quarter, largely as expected.

Rabobank senior food retail analyst Michael Harvey said “while CPI rose 8.4 per cent year-on-year, there was a deceleration in increase in inflation which is a sign we are nearing the peak and this should also provide a welcome breather for households”.

Food inflation

“Turning to food inflation, there was also a sequential increase in food inflation – rising to 9.2 per cent in December 2022 quarter vs previous year,” he said.

However, Mr Harvey said the rate of increase did slow in food also. “Nonetheless it is the highest rate of food inflation since September 2006.

Since 2000, food inflation has only hit double-digits once. And again, it was broad-based with inflation recorded across all food and beverage categories, Mr Harvey said.

“The highest rate of inflation was recorded in cooking oils and is continuing to track at record levels,” he said.

Overall, in food (excluding beverages, alcohol beverages and foodservice) there were 15 categories of 26 that posted double-digit rates of inflation. Across staple food items there was also record levels of inflation in milk, bread and snacks and confectionery.

Mr Harvey said there was a slowdown in inflation in ‘Fresh produce’ including across both fruit and vegetables. “And for fresh produce more favourable growing conditions and less production disruption will be key to future pricing.”


“Eating out continues to be more expensive for Aussie families,” said Mr Harvey.

Food inflation (year-on-year) in ‘restaurant meals’ and ‘takeaway’ posted 6.9 per cent and 7.8 per cent increases, respectively. This was slightly higher than the previous quarter.

Mr Harvey said while these are rates below the headline food inflation number – the cost of eating out is rising at its fastest rate since March 2001 (two decades).

Consumer impacts

“Pressure on Aussie households is still growing given the rate of inflation and expectation of further interest rate rises to come,” Mr Harvey said. “Pressure on the ‘ability’ and ‘willingness’ for consumer spending is still very evident.

“But we are nearing the peak in food inflation which is some comfort,” he said. “It is unlikely we will see deflation across some staple categories such as packaged food an dairy given food manufacturers are passing through higher costs.”

Mr Harvey said global energy prices – and commodities more broadly – are down sharply over the last six months but this will take time to feed through to consumer prices.

“The peak in RBA policy rates have also shifted recently. Markets are expecting rates to fall modestly before the end of this year with a peak close to 3.6 per cent.

“And falling house values feeds back through wealth effects into consumer confidence adding to the pressure on households,” he said.

Some positive news Mr Harvey said is Australia is still expecting to avoid recession. “The local economy will be boosted by the re-opening of the Chinese economy – but with risks – at a time when we are seeing a synchronised global slowdown.”

Mr Harvey said, “Australian November retail sales, which was 1.4 per cent m/m, beat expectations but we expect to see a hit to discretionary spending in H1 2023 and this may impact food sales to some degree”.


Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of approximately 8.4 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 90 branches throughout Australia and New Zealand.