Behind the increasing cost of groceries and insurance
I would like to draw attention to several untruths in the letter from Lucy Wicks to Robertson residents received recently.
The statement that inflation has been consistently higher than comparable economies is false.
Official data shows inflation has been routinely higher than Australia in several advanced economies since May 2022.
This is confirmed in an AAP FactCheck.
Does this inflation increase the cost of items like groceries and insurance?
In Australia, rising grocery and insurance costs are driven by factors like global supply chain disruptions, increased raw material costs, higher energy and fuel prices, and increased labour costs, all impacting production, freight, and distribution.
Global events and geopolitical tensions have disrupted supply chains, leading to shortages and higher costs for raw materials and transportation.
The cost of ingredients, packaging, and other inputs has increased, impacting the final price of groceries.
Increased energy and fuel prices contribute to higher transportation and production costs, which are passed on to consumers.
Rising wages and labor costs for supermarket employees and those involved in the food supply chain contribute to higher grocery prices.
Extreme weather events, such as droughts or floods, can negatively impact crop yields and increase food prices.
Some reports suggest that while grocery prices have risen sharply, major supermarket chains have also increased their profit margins.
The Australian Competition and Consumer Commission has conducted inquiries into the supermarket sector to investigate pricing practices and the impact on consumers.
Insurance premium have increased due to a number of factors, including increased claims costs, rising inflation, market conditions and rising interest rates.
Higher claims costs due to natural disasters, such as floods and bushfires, have pushed up insurance premiums.
General inflation, including rising costs for repairs and materials, contributes to higher insurance premiums.
Competition among insurance providers and the overall economic climate can also influence premium rates.
Higher interest rates can increase the cost of borrowing for insurers, which can lead to higher premiums.
What did contribute to inflation?
The peak in Australian inflation, which reached 7.8 per cent in December 2022, was driven by a combination of factors, including the Russian invasion of Ukraine, post-pandemic stimulus effects initiated by the Morrison Liberal Government and heightened demand due to the easing of restrictions.
Specific contributors included supply chain disruptions, rising corporate profits, and increased demand for goods and services after lockdowns.
Additionally, high energy and food prices, along with the accumulation of household savings during the pandemic, played a significant role.
The profits made by large corporations during this time are huge: some $100 billion over and above their pre-pandemic profit margins.
According to Australia Institute research in November 2024, these rising profits made up more than half of the inflation above the Reserve Bank of Australia's target range of two to three per cent.
Don't get me started on housing affordability.
We have watched changes to taxation arrangements introduced by the Howard Government move housing as shelter to housing as wealth generation.
Then, after introducing the Capital Gains Tax Discount (a discount on the tax wealthy people pay on the wealth their investments have generated), the Howard Government pushed demand and prices further by introducing the First Home Owners Scheme and overseeing a decrease in Commonwealth funding to the supply of social, subsidised, affordable, secure, rental housing for low income earners.
Lucy Wicks and the Liberal Party aim to reduce inflation by cutting services.
Their nuclear energy plan will not provide cheaper energy.
It will rely on continuing to support the fossil fuel industry and the mine owners.
The Liberals do not have a good record on quality affordable health care, having frozen the Medicare Rebate for many years, forcing GP clinics into mixed billing and overseeing a reduction in the number of students studying to be GPs.
SOURCE:
Email, 14 Apr 2025
Sally Jope, Umina