Australian food distributors warn of 7% price rise amid fuel and fertiliser cost pressures
Industry groups say rising fuel, fertiliser and operating costs could push food and beverage prices up about 7% in the coming months, adding to inflation pressures on Australian households.
Food distributors representing roughly 100 firms that supply around 80,000 businesses and institutions warned that food and beverage prices in Australia could increase by about 7% on average across categories. The estimate was given by Richard Forbes, general manager of stakeholder relations at Countrywide Foodservice Distributors, who cited the combined impact of higher global fuel prices, a fertiliser supply squeeze and domestic cost pressures.
The Australian Competition and Consumer Commission recorded a 23% rise in food and non-alcoholic beverage prices between March 2019 and June 2024. Recent Australian Bureau of Statistics data show food and non-alcoholic beverages were 3.2% more expensive in September than a year earlier, with meals out and takeaway food up 3.9%. Category-specific increases were higher, including fruit (+10.2%), milk (+5.4%) and beef and veal (+5.8%).
Analysts linked the price pressure to a global fertiliser shortage exacerbated by disruptions in the Persian Gulf. The World Bank’s October outlook projected global fertiliser prices to rise 14% in the current year and forecast food commodity prices to increase about 10% in 2026 and another 7% in 2027. Deputy chief economist Ayhan Kose said commodity markets are facing multiple shocks simultaneously.
Domestic distributors also reported sharply higher operating costs. Cameron Kenley, chief executive of Cadell, said his company’s annual fuel bill rose 50% to $1.8 million. Moco Food Services owner Mike Peberdy said distributors cannot absorb the increases and must pass them on to customers to remain viable.
The rising cost environment comes as food insecurity remains high. Foodbank’s 2026 Hunger Report estimated that 3.6 million Australian households, about one in three, experienced food insecurity in the past year. Rental costs have also surged, with average capital-city rents up 56.8% between June 2015 and June 2025, according to an analysis of SQM Research data.
Consumer price monitoring by CHOICE found that a basic eight-item basket rose 11% at IGA, 8% at Aldi, 6% at Coles and 2% at Woolworths compared with its previous survey, indicating price growth across retail channels.
"We believe an increase of 7 per cent in food and beverage prices, as an average across all categories, is realistic given the ongoing compounding effect of global and domestic pressures," Richard Forbes said.
"You're having the profit margins of farmers squeezed because their costs keep going up," Commonwealth Bank agricultural economist Dennis Voznesenski warned earlier this year.
"Frankly, we have to pass on the price rises," Mike Peberdy added.
Industry groups and analysts say the convergence of higher fuel, fertiliser and logistics costs is likely to keep food price inflation elevated in the near term, putting additional strain on Australian households.