Australian families, mortgage holders will cut fresh fruit & vegetables as fuel prices drive up grocery costs

Australian families paying off a mortgage and struggling workers are now more likely to cut back on fresh fruit and vegetables as the Middle East conflict pushes up petrol prices, a charity boss says.

Motorists in some parts of Sydney are now paying $2.20 a litre for unleaded but in most capital cities, average prices are hovering just under $2.

Double-digit rises in crude oil along with wholesale petrol and diesel prices since Sunday are expected to cause more pain beyond the bowser.

This would be a particular problem in a drier and more isolated State like South Australia that sources more of its fresh food from interstate, making diesel-powered transport on trucks a bigger component of the prices a consumer pays at the supermarket.

Higher freight costs are also expected to drive up the costs of food, with Foodbank’s South Australia and Northern Territory chief executive Greg Pattinson warning that families are likely to be cutting back on fresh produce.

“They’ll be some families that say, ‘Look, I can’t afford to buy the most expensive fruit and vegetables so I’ll buy some cheaper processed food’,” he told The Nightly.

“Any of those foods that do require fuel and freight — fruit and veg being one of those — it may well be impacted.”

Foodbank, which supplies food to 152,000 needy individuals every month in SA and the NT, is expecting to cut back on providing cheaper laundry detergent and shampoo to deal with the higher cost of transporting groceries to its stores with a fleet of 20-plus vehicles.

“That’s money that we would otherwise have been putting towards food procurement but we’re now going to have to spend on fuel,” he said.

“We wouldn’t sacrifice the key staples — things like meat and milk and cereal, those key foods that people need all the time; it’s probably some of the more discretionary things — it might be laundry detergent or shampoos or pet food even.

“Of the people seeking food assistance, nearly two-thirds have jobs and over a third have mortgages.”

Treasurer Jim Chalmers on Tuesday wrote to the Australian Competition and Consumer Commission’s acting chair Mick Keogh asking his agency to monitor potential petrol price gouging.

“I would expect the ACCC as the independent regulator enforcing Australia’s competition and consumer laws to investigate any concerns arising about misrepresentations regarding petrol prices, false and misleading conduct or anti-competitive conduct in petrol markets, and to take appropriate action,” Dr Chalmers said.

With Australians in work increasingly needing help from charity, instead of the jobless, Reserve Bank governor Michele Bullock on Tuesday said her monetary policy board would focus more on inflation instead of preserving gains in the labour market, following criticism from some economists.

“We’re not putting too much emphasis on unemployment — we are trying to look at where the risks lie; at the moment, they lie, we think, more on the inflation side so we’re paying more attention to that,” she told a business summit in Sydney.

“There are critics who said we should have increased interest rates much, much higher and that would have resulted in unemployment being much higher . . . like New Zealand and Canada who now have unemployment rates with fives and sixes in front of them.

“Yes, we could have done that. In many ways, that would have been the very easy decision.”

A tight labour market isn’t the only factor fuelling inflation, with broader supply constraints and poor productivity also part of the problem.

The Commonwealth Bank, Australia’s biggest home lender, is expecting national accounts data due out on Wednesday to show the economy last year grew by 2.7 per cent, up from the September quarter’s annual pace of 2.1 per cent.

“At this pace of economic activity, the Australian economy is running well above its speed limit,” senior economist Ashwin Clarke said.

Australia’s housing shortage crisis also shows little sign of moderating with 193,478 new residential homes approved in the year to January, new Australian Bureau of Statistics data released on Tuesday showed.

This is well below the 240,000 needed a year under a National Housing Accord with the Commonwealth and the States to build 1.2 million homes over five years to cope with immigration-fuelled population growth.

“The mismatch between supply and demand in the housing market isn’t simply theoretical,” Institute of Public Affairs senior research fellow Dr Kevin You said.

“Young Australians feel it in the long lines at rental inspections, when they get rejected for a home loan, when they get outbid at an auction, and when they get notice of a rent increase.”