Mixed food price trends

Monthly Food Inflation Update - May 2025

The latest Consumer Price Index (CPI) data for May 2025 reveals a mixed performance in Australian food prices, with some categories easing while others continue to climb. On a monthly basis, food inflation showed moderation overall, led by declines in several staple categories. Fruit and vegetables fell by 0.8%, bread and cereals dropped by 0.5%, and dairy eased 0.4%. These declines signal some light relief for households, likely reflecting seasonal factors and improved supply chain conditions. However, the trend was not uniform. Meat and seafood prices rose 0.9% over the month, while alcohol prices increased 0.8%, indicating persistent price pressure in some discretionary and protein-heavy categories.

Looking at the broader picture, annual food inflation from 2024 to 2025 highlights a continued upward trend across nearly all major categories. Alcohol leads with a 3.8% increase over the year, followed closely by fruit and vegetables at 3.7%. Meat and seafood recorded a 2.5% rise, while bread and cereal prices climbed 1.9%. Dairy prices showed the smallest annual movement, up just 0.3%, confirming the subdued month-to-month pattern observed in May.

These shifts underscore the variable inflation dynamics across food categories. While monthly deflation is evident in fresh produce and staples, year-on-year data suggests broader food price pressures remain embedded, particularly in alcohol and protein-rich products. With input costs stabilising and consumer demand shifting, food inflation may continue to fluctuate in the coming months, requiring close monitoring from policymakers and consumers alike. The overall headline annual CPI of 2.1% is likely to encourage an interest rate adjustment downwards at the next Reserve Bank of Australia meeting though.