The Consumer Price Index (CPI) was released yesterday, and as all the commentary has stated, it’s not pretty for those hoping the Reserve Bank would leave interest rates on hold for a bit longer. Our interest lies in the retail prices of meat, and it is beef which has by far outstripped inflation in general, and it’s competing proteins.

The CPI dataset is pretty big.  You can look at price indices for all sorts of goods and services which are collected to make up the CPI.  We delved into the data to find the indices for beef, lamb (and goat), pork and chicken.

A rising beef price index shouldn’t have come as such a surprise, given what has been happening in cattle and beef export markets in the first quarter.  We should have known something was up when there was no steak on a pub menu over Easter, and the CPI data confirmed high prices with a big rise in the March quarter.  Figure 1 shows the price indices of the four proteins, and beef is way out in front.

All the indices are based on prices at the start of 2012, so the level tells us how much prices have risen since then.  With its most recent leg up, beef is now 73% more expensive than 10 years ago.  Lamb is up a relatively benign 37%, pork is around the CPI itself, at 25%. 

As everyone who shops at the supermarket will know, chicken is relatively cheap, just 11% higher in 10 years.  Over 5% of the chicken rise came in the March quarter, likely due to increasing production and transport costs. 

The beef price index was up 7.5% on the December quarter, and up 12% for the year.  Figure 2 shows the beef price index has followed a mostly upward trajectory since 2019.  Lamb and pork showed little price increase in 2020 and 2021, even lower than the CPI, but have outstripped the CPI in the year to March.

What does it mean?

Beef appears to be in danger of pricing itself out of reach of many consumers.  At least the better quality cuts are becoming prohibitive, and when everything else is costing more, it might be the steak which is cut back. 

Other proteins are also rising, most notably lamb, but pork and chicken are going to keep gaining market share, rising at, or slower than inflation in general.

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Key Points

  • The CPI wasn’t very nice for those hoping for static interest rates.
  • Meat prices were all stronger in the March quarter, rising strongly.
  • Beef price rises have by far outstripped other proteins, which is likely to see demand shift away.

Click on figure to expand

Click on figure to expand

Data sources:  ABS, Mecardo

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