Australiaโs inflation woes are spreading out from the fuel sector to everything from discount fast food meals to premium computers, keeping inflation higher as merchants begin to price in costs that they had once tried to absorb.
Over the past year, food and beverage prices rose 3.2 per cent, alcohol prices gained 4.5 per cent, and clothing and footwear increased 4.8 per cent on average according to the Australian Bureau of Statistics.
โThere are a bunch of businesses who havenโt shifted their prices or havenโt shifted them much because they keep hoping price shocks will be temporary,โ said independent economist Chris Richardson. โBut as this looks more and more like a forever war, businesses will build that into their pricing.โ
Iran has kept the Strait of Hormuz largely closed amid its ongoing conflict with the US under President Donald Trump, while the Houthi militia movement in Yemen has curbed shipping through the Red Sea. Both steps have sharply curbed oil coming out of the key region.
โPeople know they used to be better off,โ Richardson said. โThose fuel prices are starting to wreak havoc upstream and that will hit downstream everywhere from supermarkets and your Amazon purchases.โ
McSmart meals
In mid-2025, McDonaldโs froze the price of its McSmart Meal (two burgers, fries, and a drink; or three nuggets or a sundae instead of a second burger) at $7 for 12 months, but that freeze is now over. It will now cost you $7.95 to get a McSmart Meal, which now offers the option of a hash brown, apple pie or cookies โ all smaller items โ instead of a second burger.
The more affordable offer, the $6.95 โMcSmart Saverโ, will get you a hamburger, small fries and a drink, and three nuggets โ but is only available on the MyMaccaโs app.
Macbooks, phones, and tech
Billed as Appleโs โmost affordable laptop everโ, the Macbook Neo launched in Australia earlier this year at a starting price of $899 โ but in late June, Apple lifted their prices around the world, pointing to the data centre boom that has resulted in a shortage of storage and memory parts (nicknamed โRAMageddonโ).
The Reserve Bankโs assistant governor Sarah Hunter called out the AI boom as a contributor to global economic and inflation risks.
โAnyone whoโs bought a new iPhone recently might have noticed that the price went up quite a bit. Thatโs actually true for consumer electronics more generally,โ she said on Monday.
โIt certainly doesnโt move an aggregate needle, but itโs just to give you an example of that global environment potentially being more inflationary.โ
Grocery staples
Supermarkets are one of the first to see how our purchasing patterns change, and Coles, Woolworths and Aldi have all announced lower shelf prices in recent months to keep shoppers on side.
Swathes of pantry items now cost more than they did just months ago. A bottle of Bertolli extra virgin olive oil dressing, which was $10 three months ago, will now cost you $16 at full price at Coles. A four-pack of Mother energy drink that would have cost $9.30 in June, is now $14.50, according to figures provided by grocery price comparison site WiseList.
German discount supermarket Aldi isnโt immune from price hikes either. A box of White Mill banana bread mix that was $1.99 six months ago is now $2.49.
Economists are flagging more pain to come. With harvest season now kicking in, higher diesel and fertiliser costs are yet to be passed on. โItโs not over yet,โ said Richardson.
Cafe and restaurants
Hospitality operators have been struggling with higher electricity, wage, and ingredient costs for years. Consultant and Catering HQ managing director Steve Sidd said his business has overhauled its menus across over 30 venues. Food costs, which usually cover around 30 per cent, had to be reduced to 25 and 26 per cent
โThere have been so many costs weโve had to absorb this year alone,โ Sidd said. โWe can only sustain so much, absorb so much cost before passing onto the consumer. Weโve had no choice but to put prices up.โ
โThe scary part is, thereโs only so much our customers are willing to pay as well.โ
Sidd has introduced more weekly specials to tempt diners in during the week, but has removed specials during the busy weekend period to maximise margins. In one instance, a popular lamb dish that had been sold for more than a decade had to be removed from the menu as lamb prices hit record highs, and replaced with a seafood dish.
โI know my customers are not willing to pay for it,โ said Sidd. โBut if I didnโt do it, Iโd have to close my doors. Weโd go belly up.โ
He predicts that other operators, which arenโt adjusting menu prices and even discounting meals, will not survive. โMore and more businesses are closing their doors every day. Itโs scary.โ
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Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect via X or email.From our partners
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