Food prices at the two major supermarket chains climbed an average 9.2% in the December quarter, accelerating from 8.2% in the September according to UBS research. Of the 60,000 items UBS tracks food inflation was steepest in the fresh category, led by dairy and meat. Fresh food inflation was running at 9.6% in the December quarter compared with dry grocery items on the shelves at 9%. UBS also found that in the month of December food inflation reached 9.4%, above the average for the December quarter, as momentum increased in the lead-up to Christmas.

Separate UBS research on dairy, meat, fruit and vegetables found that in the December quarter, prices across those categories were around 10% higher than the same quarter a year earlier. That study found that dairy prices were up 14% in the December quarter compared with a year ago, cheese leading the charge with a 24% price increase. Butter prices were up 18% and white milk was up 14%. UBS analyst Evan Karatzas said industry forecasts were for a reduction of up to 7% in Australian milk production in 2022/23, which would put further pressure on prices as processors competed for a shrinking pool of supply.