Wholesaler’s grim warning before Christmas
Australia’s largest wholesale food distributor has sounded the alarm about rising inflation, warning food costs jumped by 8.8 per cent in November alone.
Metcash, which supplies products to supermarkets including IGA and Foodland, has revealed the stark price increases while announcing its financial results on the ASX on Monday.
The wholesaler reported an 8.2 per cent rise in sales in the first half of the 2022/2023 financial year as net profits fell by 2.4 per cent – which the company attributes to rising costs.
Group chief executive Doug Jones said the company had performed well with strong growth since July despite the impact of increasing inflationary pressures.
“It has been another pleasing half for Metcash with strong sales and earnings growth in the face of higher inflation and while cycling the impact of extensive lockdowns,” he said.
“We are prioritising volume growth … to keep our retailers competitive, particularly whilst facing their own cost pressures.”
The inflation report, however, revealed wholesale prices of food grew rapidly from 4.9 per cent in the first quarter to 7.4 per cent in the second.
In October, prices rose by 8.4 per cent, which then accelerated by 8.8 per cent the following month.
The figures reported by Metcash do not include the wholesale prices of tobacco and fresh produce.
Metcash warned uncertainty remained over the level of inflation going forward, as well as how the impact on cost of living may change consumer behaviour.
The wholesaler said “extensive” supply chain issues which plagued the first half of 2021 had eased but the threat remained.
Mr Jones said the group outlook indicated rising fuel, freight and labour costs alongside possible additional supply chain disruptions would continue to be a risk into the second half of the financial year.
“There was some improvement to the extensive supply chain challenges experienced in the 2022 financial year, and our operations again exhibited resilience and flexibility,” he said.
“Overall network health continued to strengthen, and retailers are operating with a high level of confidence and reinvesting to further improve the quality of their stores.”
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