Latest / Best of Business / Brad Olsen: Infometrics Principal Economist on data showing food prices rose 4.5 percent in the year to February

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Brad Olsen: Infometrics Principal Economist on data showing food prices rose 4.5 percent in the year to February · Best of Business

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  Speaker 2: Right, we've got the latest food inflation numbers and mince
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  Speaker 2: is the one that's really shot up. It's gone up
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  Speaker 2: in price by almost a quarter, which is the biggest
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  Speaker 2: annual increase in two decades, and it's contributed to food
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  Speaker 2: prices being four and a half percent higher in the
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  Speaker 2: year to February with US now to analyze this is
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  Speaker 2: Infametrics Chief executive Brad Olson.
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  Speaker 3: High, Brad, Good, afternoon.
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  Speaker 2: Right, this is just the international meat prices, isn't it effectively?
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  Speaker 3: I mean we've basically seen MINS prices increase every single
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  Speaker 3: month for the last wee while, and to be honest,
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  Speaker 3: I don't necessarily see that changing. We know that internationally
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  Speaker 3: there's still a lot of demand for protein. The US
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  Speaker 3: is looking for beef they need to make their hamburgers
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  Speaker 3: and everything else, and there's not as much of it
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  Speaker 3: around the world. In the US, they've got the lowest
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  Speaker 3: beefstock numbers in like fifty years. If there's not animals
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  Speaker 3: running around, they can't kill them and eat them for
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  Speaker 3: us here at home. Even we've seen lower numbers of
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  Speaker 3: beef being killed over time. I think it's down like
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  Speaker 3: something like three percent. So it does get us into
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  Speaker 3: that position. Strong demand, not quite as much. Supply prices
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  Speaker 3: have increased substantially, but of course that's hitting the bottom
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  Speaker 3: line for a lot of Kibi households where mince is
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  Speaker 3: normally or has been before the cheap option, now it's
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  Speaker 3: nowhere near.
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  Speaker 2: Now, take a look at what is going on in
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  Speaker 2: Iran and tell me what's going to happen to food prices,
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  Speaker 2: not just mince, but food prices from here on.
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  Speaker 3: It well, it doesn't take a genius or an economist
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  Speaker 3: to tell you that, I mean, prices are going to
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  Speaker 3: go up weeks how much? Well, and that's the question,
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  Speaker 3: and probably also how quickly? Is the point that we
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  Speaker 3: keep coming back to. We know that not only oil
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  Speaker 3: prices are key to transport costs, but also just the production.
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  Speaker 3: You know, if you're a farmer, you've got to use
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  Speaker 3: diesel to move stuff around, to run the tractor and
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  Speaker 3: everything else. So this is going to hit. We've done
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  Speaker 3: some numbers recently that show that ten percent of non
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  Speaker 3: wage operating costs into supermarkets are purely because of transport costs,
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  Speaker 3: So that's going to really start to hit. What I
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  Speaker 3: expect and what I'm hearing is sort of two angles. One.
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  Speaker 3: Some businesses are saying, we know that prices have continued
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  Speaker 3: to go up. We're not going to pass on because
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  Speaker 3: we're too uncertain. We're going to try and ride this
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  Speaker 3: out and eat the cost for the next couple of weeks.
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  Speaker 3: Others are saying, you know what, prices have increased heaps,
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  Speaker 3: I need to increase mine as well, and so they're
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  Speaker 3: pushing through them quickly.
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  Speaker 2: But it's not just the next two weeks, isn't it.
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  Speaker 2: I mean, as we know, there's a lag effect from
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  Speaker 2: what happens here and stuff that is. I mean week,
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  Speaker 2: for example, takes months to grow, so we're still months
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  Speaker 2: away from feeling feeling what it does to bread. So
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  Speaker 2: when does this If the war was called off today,
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  Speaker 2: when would we be through what is going on with
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  Speaker 2: inflation as a result of it.
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  Speaker 3: I think there's almost sort of two hits that come through.
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  Speaker 3: The first is within the next sort of month to
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  Speaker 3: three months, you'll definitely see that big impact hitting and
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  Speaker 3: that will start. I think the next week or two
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  Speaker 3: are for some food items. It's more though that even
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  Speaker 3: within the next year, you're going to see the impact
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  Speaker 3: because of all those high fertilizer prices you're seeing at
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  Speaker 3: the moment. If a farmer's going out to get their
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  Speaker 3: fertilizer for next season and not applying as much because
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  Speaker 3: it's more expensive, that's going to hit yields and what
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  Speaker 3: they're producing sort of within the next twelve months, so
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  Speaker 3: it's not an immediate hit. I think you sort of
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  Speaker 3: see that shorter one within the next three months and
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  Speaker 3: probably in the next couple of weeks pushing through then
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  Speaker 3: not quite a lull, but not as intense pressure. And
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  Speaker 3: then it's more just again how much supplies they're coming
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  Speaker 3: into the system, what other shocks come through. But let's
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  Speaker 3: be clear, I don't know if this conflict ends anytime soon,
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  Speaker 3: and if it doesn't, that's where the pressure comes on.
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  Speaker 3: It's not just the price, it's also can we get
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  Speaker 3: enough fuel?
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  Speaker 2: Yeah, well, thanks for giving us a reality, Brad. I
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  Speaker 2: do appreciate it. It's Brad awesome. Informetric's chief executive.
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