Consumers are mincemeat, but the RBA keeps raising the heat

October 29, 2026 — 3:24pm

If you hadn’t guessed already, Australia’s top retailers can confirm we’re all doing it pretty tough at the moment.

On Wednesday, Woolies boss Amanda Bardwell told investors that despite a drop in the average price of the supermarket’s groceries, customers are shopping around more keenly than ever and only showing loyalty to the cheapest deal.

“The amount of pressure on young families, particularly, and families more broadly is increasing,” Bardwell says.

Mince has never been more popular – Woolies’ sales are up significantly – as families try to keep their bellies full on cheaper protein.

It looks like the soaring price of lamb chops and steak will be the proverbial barbecue stopper this summer.

But it’s more sobering than that, with the news this week that food insecurity is a reality in middle-income families. One in three households are going hungry as the cost-of-living crisis bites, a Foodbank survey has found.

And don’t expect this pressure to ease. El Nino is adding to the risk of even higher food prices, with reduced rainfall and higher temperatures expected to hit livestock and crop production.

But the price shock doesn’t stop at the kitchen table.

On Thursday, shopping bellwethers JB Hi-Fi, Rebel sports chain owner Super Retail and Bunnings joined the chorus of retailers pointing to the impact of the cost-of-living crisis on their sales.

Preparations for festive season bargain hunting may have helped send sales into reverse in the September quarter at JB Hi-Fi’s electronic retail franchise in Australia.

“The group continues to see variability in trading and heightened competitive activity, with customers remaining focused on value and increasingly shopping during promotional events,” chief executive Nick Wells told investors at its annual meeting.

“In October, the group has seen sales slow ahead of the important Black Friday and Christmas trading periods.”

Even Wesfarmers’ rock star businesses Bunnings and Kmart are feeling the pain from shoppers’ constraint.

Wesfarmers boss Rob Scott told his fellow shareholders in Perth how “persistent cost pressures with elevated inflation and rising interest rates” have created a moderation in retail demand.

He said the group had noted at its full-year results in August how the uncertain outlook for inflation, house prices, interest rates and tax settings were weighing on consumer sentiment.

Since then, the Reserve Bank has lifted rates yet again, and a fifth rate hike for the year is expected on Melbourne Cup Day. It will only worsen the pressure on household and business budgets.

Add in a shock inflation result this week, and the only question is how much worse is it about to get. Some economists are already forecasting that a rate rise next week may not be the last, after the Australian Bureau of Statistics reported inflation climbed to a higher-than-expected 4.3 per cent in September.

US President Donald Trump’s war in the Middle East continues to send energy prices much higher than the RBA had assumed in August.

RBA Governor Michele Bullock also pointed to the equally unyielding AI boom, which is driving up computer chip and storage costs and is adding to a global construction boom.

Bullock told a Senate committee this week that Australia’s labour market is “a little tighter than we had previously judged”, despite rising unemployment.

That’s right, the working poor are part of the problem.

An interesting aside to the soaring inflation rate is that it includes a rapid rise in the price in legitimate tobacco sales from a higher excise, but overlooks the massive decline in real dollars spent on cigarettes as smokers move almost entirely to the black market.

It would be comical, if not for the further pressure it puts on non-smoking families via higher inflation, which is prompting higher interest rates.

What to do?

Peace in the Middle East would help ease the searing pain for Australian households.

So would an AI crash that knocks out the soaring cost of expensive tech components – though it could spark another global financial crisis, with dire consequences for companies, and, ultimately, consumers.

As far as local concerns go, our productivity needs to do some heavy lifting too, as departing Wesfarmers chairman Mike Chaney points out.

“Our economy is facing headwinds – low growth, weak productivity, dismal confidence and limited ambition or capacity for reform,” he outlined in an interview this week.

Lots of ingredients in this toxic mix. And none of it is going to be fixed at the kitchen table.

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