Australia’s headline inflation has accelerated sharply, but food price growth has remained relatively stable, according to the latest Consumer Price Index (CPI) data released by the Australian Bureau of Statistics.
Annual inflation rose to 4.6% in March 2026, up from 3.7% in February and the highest level since September 2023. However, food and non-alcoholic beverage prices increased by 3.1% year-on-year, unchanged from the previous month and broadly consistent with levels recorded since mid-2025.
RaboResearch senior food retail analyst Michael Harvey said food inflation remains “entrenched” slightly above three per cent, continuing a trend observed over the past 10 months.
“Despite moderating from earlier peaks, food inflation remains a material contributor to household cost pressures due to its weighting in the CPI,” he said.
Within the food category, meat and out-of-home meals were the primary drivers of price increases. Beef and lamb prices continued to record double-digit inflation, supported by strong domestic livestock markets. Coffee prices also rose significantly, increasing 10.7% year-on-year due to global cost pressures.
Fresh produce results were mixed. Fruit prices increased 4.3%, with notable rises in strawberries, blueberries and apples, while vegetable prices recorded slight deflation of 0.2%. Overall fruit and vegetable prices rose 1.8% year-on-year.
Mr Harvey noted potential upward pressure on vegetable prices in coming months, as rising input costs may lead some growers to reduce planting volumes, tightening supply.
Dairy prices also showed upward movement, with milk increasing 4.0% year-on-year. Recent retail price increases for private-label milk are expected to flow further through the market. In contrast, cheese prices declined for a second consecutive month due to promotional activity.
Cooking oil prices provided some relief, falling 0.8% year-on-year. However, global supply factors, particularly in olive oil markets, remain a key influence on local pricing.
Looking ahead, geopolitical factors are expected to play an increasing role. Rising fuel and fertiliser costs linked to the Middle East conflict are placing pressure on the food supply chain, from farm production through to processing and distribution.
Mr Harvey said further food price increases are likely across several categories in the coming months, with ongoing cost pressures continuing to influence both producers and consumers.
