The mystery about Australian inflation
February 26, 2011 1 Comment
Woolworths reports a weak profit result as it cites deflation of 3% from its food & liquor business. This division generates ~ 75% of Woolies earnings.
I have wondered about whether retailers can pass on the rising costs of products that are placed on their shelves and I did think they would and could.
So, petrol prices are rising, my groceries cost more as do many other items apart from consumer electronics.
The Reserve Bank posts inflation figures that are comical when compared to the rising costs and prices that I experience and Woolworths are telling us that their profit is low due to deflation.
I don’t know how food prices can be falling when you consider the increase in agricultural commodities and transport costs but supermarkets also sell that other modern staple being the fast moving consumer good (FMCG).
Are batteries, razor blades, toothpaste or shampoo any cheaper than last year ?
rob zdravevski's blog 
Based on my experience, homewares certainly are cheaper than last year. And some office products. The major chains are pushing aggressively into private label and lowering prices in general merchandise. But I doubt whether value has improved because quality has been reduced even more than price.
My concern with the retailers is whether they can manage the increased complexity of private label. Watch their inventories…