A recent survey by the Australian Food and Grocery Council shows suppliers are being hit across multiple expense lines, from fuel to resin used in plastic packaging. Around one-fifth of suppliers report cost increases above 20% while the average rise in operating costs sits at about 12%.
Supermarkets are now being pushed by their suppliers to increase retail prices on a wide range of grocery items. Rising fuel costs feed directly into higher freight and distribution expenses, which then lift the cost of getting products from factories to supermarket shelves.
More expensive resin, a key ingredient in plastic packaging, adds another layer of inflation to everyday goods that rely on bottles, tubs and wraps. These pressures compound existing cost increases in wages, energy and logistics already confronting the food and grocery sector.
The combined effect makes it harder for supermarkets to absorb supplier cost hikes without passing them on to consumers. The latest survey data indicates the Middle East conflict is now feeding into Australian grocery prices through higher input and transport costs, rather than just energy markets.
Retail analysts say the broad-based nature of these supplier increases signals more entrenched food inflation, rather than a short-lived spike. That prospect increases the risk that grocery bills become a persistent driver of overall cost-of-living strain, even if broader inflation starts to cool.
