We've been talking about record cattle prices for a while now, but are these being passed through the supply chain to the consumer?
A check of Australian retail prices show we are nearing records in this space too.
Rabobank's calculations from the Q1 2021 Consumer Price Index (CPI) figures for Australia show that the average Australian retail price for beef was $23.87/kg.
In nominal terms, this is the highest value since records began. But adjusted for inflation, it is just below the peaks seen in the late 1970s and early 1980s when prices reached $25.23/kg.
Beef has seen some of the largest price jumps of all the meats. Beef has increased 8.4 per cent on Q1 2020 and 17.9pc on Q1 in 2019.
Poultry prices saw a big jump in the past 12 months - up 12.7pc - but not as high over the last two years - up 14.1pc. Lamb prices only increased 1.7pc and pork contracted 9.8pc in the last 12 months.
Meat and seafood (up 3pc year on year) was one CPI category experiencing a larger price jump than others over the past 12 months.
Bread and cereal prices contracted 0.2pc, dairy increased 0.4pc and fruit and vegetables contracted 3.1pc.
The fact that not all food categories have risen would be creating a balance across the shopping basket - affording a degree of tolerance to rising beef prices for those large supermarkets that can take advantage of the spread.
The ability to spread the rising beef prices across the shopping basket, plus the very healthy retail sales figures, would support what is suspected to be very strong buying activity by domestic supermarkets in the cattle and beef markets.
Indications are that the large supermarkets have been very active buying cattle and that this is part of the reason we continue to see very strong cattle prices.
Retail food sales figures have consistently been about 10pc higher year on year throughout the course of last year.
This trend has continued into 2021, with average growth of 10pc (compared to 2019 values) across the first four months of the year. Initially this increase in retail sales was compensating for the drop in foodservice sales.
But through the second half of 2020 and into 2021, we have seen foodservice sales recover and now exceed previous levels. Australian foodservice sales increased 6 per cent on 2019 levels in April this year.
Continuation of the strong retail food demand and the capacity of retailers to pass on higher cattle prices has been a crucial factor in supporting current high cattle prices.
In the June RBA statement by governor Philip Lowe, it was noted that "While a pick-up in inflation and wages growth is expected, it is likely to be only gradual and modest".
If this remains the case, we are unlikely to see more restrictive monetary policy in the short term.
However, given Australian consumers' capacity to accommodate these higher beef prices has supported supermarket buying activities, any more restrictive policy that would impact disposable incomes may be a signal for weakening demand.
Sign up for our newsletter to stay up to date.