Latest / Early Edition with Ryan Bridge / Brad Olsen: Infometrics Principal Economist on food price growth, and whether Iran war will have an impact

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Brad Olsen: Infometrics Principal Economist on food price growth, and whether Iran war will have an impact · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Food prices update for you this morning. New Informtric's numbers
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  Speaker 1: show supply costs to supermarkets two point three percent higher
• 0:06
  Speaker 1: in February this year than the same time last year,
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  Speaker 1: steady on January. Of course, this was all before the
• 0:11
  Speaker 1: all before the war. Brad Olsen, Informetric's principal economists with
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  Speaker 1: us this morning. Morning.
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  Speaker 2: Brad, Good morning.
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  Speaker 1: And that's the thing, isn't it's all backwards looking now
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  Speaker 1: that the data that we're getting, any supermarket's going to
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  Speaker 1: put up prices soon or are they now? Do we know?
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  Speaker 2: Well? I think that one of the challenging questions at
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  Speaker 2: the moment is that exact point we know there's further
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  Speaker 2: pressure coming through the supply chain. The question is how
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  Speaker 2: quickly all of this will emerge through because for a
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  Speaker 2: lot of producers, you know, they've probably locked into two contracts,
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  Speaker 2: you know, maybe with their transport agency or whatever else
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  Speaker 2: for the next sort of months or so, so we
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  Speaker 2: might not see the figures show up as immediately in March.
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  Speaker 2: It's probably the one area we are a bit more
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  Speaker 2: focused on is probably the likes of produce because the
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  Speaker 2: cost there do change around a lot, and again, transport
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  Speaker 2: costs are fairly important there, not only for moving produce
• 1:02
  Speaker 2: to store, but because all of the harvesting and everything
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  Speaker 2: else has to go through with using diesel. What we
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  Speaker 2: have seen as well is that margins are in the
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  Speaker 2: transport sector have been squeezed a lot the last couple
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  Speaker 2: of years, and so we wouldn't be surprised to see
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  Speaker 2: that sort of pass through emerging. And given you know
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  Speaker 2: just how much these fuel prices have increased, it would
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  Speaker 2: seem sensible that, yes, you'll see some pass through. The
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  Speaker 2: question is sort of how quickly. I expect you will
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  Speaker 2: see it. Definitely within the next three months as all
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  Speaker 2: those various contracts roll over, but I'm not so sure
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  Speaker 2: you'll see it as immediately, just given that everyone's got
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  Speaker 2: things locked up for now.
• 1:40
  Speaker 1: People are talking about this still as a short term spike.
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  Speaker 1: You know, will we get a short term spike to inflation,
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  Speaker 1: but then we will overcome it? Is that realistic? I mean,
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  Speaker 1: we know what happened last time, not long ago, that
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  Speaker 1: we had a spike in inflation. I mean, it's so
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  Speaker 1: stubborn exactly.
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  Speaker 2: And not only so stubborn, but if we were starting
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  Speaker 2: from a normal inflation level, if you will sort of
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  Speaker 2: around that two percent, then you might get a bit
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  Speaker 2: of a feeling that that sort of overall spike might
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  Speaker 2: be less intense. People could weather the storm are a
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  Speaker 2: little bit more. And we know as well that usually
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  Speaker 2: in oil supply shock like this, yes, it hits headline
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  Speaker 2: inflation and pushes it up, but it also generally means
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  Speaker 2: that households and businesses are spending more on fuel. That's
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  Speaker 2: less money in the budget available for other things that
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  Speaker 2: will temper demand in other sectors, and so the Rezoo
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  Speaker 2: Bank and everyone else can generally look through it. The
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  Speaker 2: difference this time, potentially is that we're already seeing inflation
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  Speaker 2: out the top of the band, so we've got less
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  Speaker 2: room to maneuver. Clearly, businesses are sort of, I guess
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  Speaker 2: you could say, more willing and ready to send through
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  Speaker 2: price increases, and so you do have to question will
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  Speaker 2: businesses overall be going if fuel prices come down and
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  Speaker 2: say a month or two's time, will they actually ease
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  Speaker 2: their prices or is this going to be part of
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  Speaker 2: effectively rebuilding the margin, the buffer the ballot sheet of
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  Speaker 2: the last couple of years. And although we often talk
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  Speaker 2: about these sort of pressures being short term, short term
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  Speaker 2: can still be months and for households out there, you know,
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  Speaker 2: for businesses who pay a lot for fuel, months of
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  Speaker 2: high costs are still deeply.
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  Speaker 1: Uncomfortable on Brad appreciate that. Brad Lsen Info Metrics.
• 3:18
  Speaker 2: For more from Early Edition with Ryan Bridge.
• 3:20
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• 3:24
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