$8 lettuce? Inflation in Australia affects everyone, from restaurateurs to diners

SYDNEY — In Sydney’s food mecca, Chinatown, menu prices at longtime restaurant Mother Chu’s have risen 20% to 30% since the start of the pandemic.

Alan Chu, owner of the Taiwanese restaurant, said price increases for lettuce and most vegetables, as well as other food ingredients in Australia, have driven up prices at his restaurant – known for serving affordable meals for about 30 Australian dollars, or about 20 dollars. , a dish.

“There has been a very big increase in the price of vegetables, for example, even a small cabbage or lettuce can go up to AUD 10-12, which is unheard of,” Chu said.

“One of the hardest things that many businesses face due to inflation is also the cost of wages. Part of that is also due to Covid and as businesses have to balance that, and also the increase in ingredients, it’s really difficult for them to continue.”

Prices for dumplings and other savory Shanghai delicacies at famed Australian restaurant Taste of Shanghai have also risen 6-8% year-to-date.

Owner Jennifer Du said she had to strike a balance between staying ahead of inflation and not raising prices too quickly for fear of alienating customers.

“I don’t want to reduce the size and plates of food for example…of course we have to increase the prices, but we have to increase them slowly,” she said.

For Du, the increase in the prices of vegetables and raw materials – including those that are imported – has been particularly strong this year.

“Prices spiked as the lockdowns ended and coupled with the floods, things like vegetables and fresh food became very expensive,” Du said.

Businessman Chris Lam, who runs a grocery store in Chinatown, agreed that soaring food prices were particularly acute this year, and said they started to rise rapidly after Easter.

Lam said prices had gone up since the onset of the pandemic as pressures from supply chain disruptions and high freight costs have built up. Rising energy and fuel – greatly exacerbated by the war in Ukraine – has also contributed to the cost of transporting food, he said.

The biggest price increases were for rice and cooking oil, which were imported, Lam said. He said many Australian consumers are now cutting back on spending.

“We see it every day, you know, with our customers. Shopping habits have been impacted,” Lam told CNBC.

“People are hesitant to spend more, everyone is tightening their belts, being more selective with the things they buy.”

Australian personal finance comparison platform Finder, which tracks prices of consumer goods, said price increases had outpaced wage growth in Australia since the start of the pandemic.

During this period, in addition to vegetables, the prices of beef and veal also rose sharply by 33%, while basic products such as milk, cheese and eggs also jumped by almost 12%, according to Finder’s Consumer Sentiment Tracker.

Gasoline prices have risen more than 30% since 2019.

“It’s something we’ve all experienced. I ordered a teapot from the Sydney [central business district] last week and I was shocked when I saw the price: A$6.70!” said Sarah Megginson, money specialist at Finder.

“These figures confirm that overall the cost of living has increased significantly for Australians.”

Household stress related to grocery bills has also increased over the past year, Finder said.

Expenses stressing Australians are rent and mortgage payments, groceries, petrol and energy, according to its Consumer Sentiment Tracker for September.

The tracker also shows that 56% of Australians are “somewhat stressed” about their current financial situation, and nearly 1 in 5 are extremely stressed. But a quarter of Australians are not stressed at all.

Most, however, say Australia can tolerate up to or just above the upper end of the Reserve Bank of Australia’s 2-3% target range.

Beyond interest rate hikes, many have cited government spending cuts as a way to curb inflation. About a third of respondents said the government should impose a super-profit tax on fossil fuel producers, with the proceeds used to reduce the cost of services.

In the meantime, restaurateurs should prepare for change, Jack Zhang, an accountant at Accentor Associates, told CNBC.

Zhang said he has been helping many restaurants restructure their businesses since the government withdrew financial support after the shutdowns ended.

Some went into voluntary administration. Others have had to cut staff shifts, while food waste becomes a challenge, Zhang added.

“Many restaurants are unable to pass on increased costs to consumers, which will lead to lower profits,” the accountant said.