‘This has been a big shock to the system’: Grocery prices tipped to jump amid supply chain chaos
It’s no secret that Australians should get their Christmas shopping in early this year, but the same problems underpinning global shipping delays could also drive up the price of what you see on supermarket shelves.
Retailers and suppliers are facing huge pressure as the holiday season approaches, with the global shipping crisis still in full swing as consumers emerge from lockdown.
Australia Post and consumer groups such as Choice have already warned Australians to factor in delays when ordering or sending goods, while other retailers are preparing for certain items to be missing from shelves thanks to a “perfect storm” that has crippled supply chains.
What’s more, there are now fears that retailers will also be forced to bump up prices to absorb the higher costs.
“It looks as though grocery prices are going to be rising,” Consumers Federation of Australia executive Ian Jarratt said.
“(And) I have not seen anything which says it’s going to end quickly.
“You’d expect it to get better eventually, but this has been a big shock to the system, and big shocks sometimes cause reverberations that continue for quite some time.”
Covid restrictions over the past 18 months have forced the closure of ports from Los Angeles to Hong Kong, while a global labour shortage, expensive shipping containers, and a boom in online shopping have also contributed to a messy situation.
Mr Jarratt, who is also the spokesman for the Queensland Consumers Association, said a competitive retailer would be doing as much as they could to make sure that prices didn’t go up for shoppers, but then that might mean producers were squeezed.
“At the end of the day, it’s the retailers that actually determine the selling price, not the manufacturers,” Mr Jarratt said.
However, he said reports were already coming through that US and UK manufacturers were trying small tricks to boost their margins.
Mr Jarratt calls it the “packet racket”, where packaging sizes are reduced but not the price.
“(People) need to be alert to the fact that when commodity prices, and other costs are set to rise significantly, some manufacturers will be tempted to reduce the pack size,” Mr Jarratt said.
One tip Mr Jarratt has for shoppers is to keep an eye on the “unit pricing” – or cost per 100 grams – instead of the sale pricing.
“If you look on the shelf labels you’ll see it tells you how much your Cornflakes cost per 100 grams, or your milk cost per litre, or your cream, it’s always there with packaged goods,” he said.
Australian Retail Association boss Paul Zahra acknowledged the various problems faced by retailers – particularly with online shopping at its highest proportion on record – and urged consumers to plan their shopping carefully.
“At a global level, retailers are reporting that the capping of incoming flights has put significant pressure on shipping, and we are seeing container costs escalating up to four times their usual rate,” he said.
“The most important thing for shoppers to remember this year for Christmas is that it’s the season to shop early. With global supply chain issues, local delivery problems coupled with staff shortages, planning ahead has never been more important.”
Ultimately, Mr Jarratt said consumers were more powerful than they realised.
“If enough consumers make changes, the industry takes notice because it affects them in terms of their turnover and profitability,” he said.
“To get the best value for themselves they should shop around between retailers because prices do vary. Look out for the specials, but be careful because there are many occasions when it’s cheaper to buy another pack size or another brand than the advertised special.”
Originally published as ‘This has been a big shock to the system’: Grocery prices tipped to jump amid supply chain chaos
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