Cameron Bagrie: Independent economist on food inflation prices increasing

Food inflation is up, rising 4.4% annually.  

Meat, poultry, and fish had the biggest annual increases, while butter, milk and cheese drove grocery prices. 

Butter surged by more than 51% over the year. 

Independent economist, Cameron Bagrie told Ryan Bridge the numbers are creeping up, but the composition of the inflation matters more than the inflation itself.  

He says they feel a bit of comfort that domestic inflation still heading south. 

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Episode Transcript

Speaker 1 (00:00):
Now Benz is predicting inflation to again creep outside the
Reserve Bank's target band, heading three point one percent annually
by September. Comes after food inflation we had yesterday up
to its highest level in eighteen months. Overall food prices
up four point four percent in the last year, meat, poultry, dairy,
keeping those prices high. Your milk, your butter, your cheese. Cameron,

(00:22):
Baggery economist is with me this morning. Cameron, good morning,
good morning. Good to have you on. What do you
reckon inflation? You're going to get out of the band again.
Is that a big deal?

Speaker 2 (00:33):
It's creeping up, But the composition to inflation matters a
little bit more than inflation itself. So what we keep
a pretty close eye is what's called non trade inflation,
which is the mestic inflation. You know, that's the piece
that the Reserve Bank can control. It's galivated but still
being heading south. So we're taking with a comfort of debt.
But what we're seeing out there at the moment is

(00:54):
furtsy of high commodity prices, particularly meat, gary prices. What's
called imput inflation or not tradeable inflation started to pop
back up, and I guess to consume what we've got
at the moment. I've got what's going on in the
Middle East is the oil prices have spiked, and yet
these or petal prices have been trending down over the
past oft of six months. They've been a deflationary force.

(01:16):
The last thing we want is to see the internal
and inflationary force and start to push us a little
bit more.

Speaker 1 (01:22):
So this I mean, it's it's a take with one
and give with the other, isn't it? The butter and
milk and cheese and stuff, because we pay more for it,
but then we also get more for it through our
primary sector.

Speaker 2 (01:37):
You know. A what we're seeing at the moment is
a really good what it's called ex food leg recovery.
So we're earning a way to growth as opposed to
spending it, which is the sort of growth that you
want to see.

Speaker 1 (01:47):
You know.

Speaker 2 (01:48):
I was a few days last week and the farmers
are pretty cheaper. Why they've got a little bit of
money in there in their back pockets. Unfortunately in the
front and farmers have got a little bit of money
in their back pockets. You know, we're going to see
a little more food and inflation. So vegetable prices are up, meat, cheese,
butter is up fifty one percent thro the year on year.

(02:08):
So what's good for the farmers is not necessarily good
for people in the back pocket.

Speaker 1 (02:12):
Meanwhile, if you're a landlord, you've actually got the lowest
increased two point eight percent increase in rent prices, lowest
since January twenty fifteen, I think, And I guess that
adds up when you look at immigration the way that's going.

Speaker 2 (02:26):
Yes, if you look at the immigration numbers of what
around twenty one thousand I think was the last three
natural population grows another twenty thousand, that's a pretty lot number.
You've got core demand in terms of people bums on
seats around forty thousand divided by two point five rough
number of people per houses. Then we need to be
building a little bit south of twenty thousand houses per year.

(02:49):
How many building percents we're issuing thirty to thirty five thousand.
There's a lot of stock up there still, it clear.
So that just adds up to a pretty weak mental
market out there, which is yeah, good news for some people.

Speaker 1 (03:02):
Cameron, appreciate your time this morning. Cameron Baggery economists with
me talking about those food prices out yesterday and the
potential for a reserve bank. Outer band cpis for more
from Early Edition with Ryan Bridge. Listen live to News
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