Rising inflation highlights need to back Australian manufacturing

1 October 2026

Rising inflation and higher interest rates are putting pressure on households and businesses alike, reinforcing the need to strengthen Australia’s ability to make food and grocery products locally, the Australian Food and Grocery Council said today.

AFGC Chief Executive Officer Colm Maguire said global disruptions over recent years had shown the importance of maintaining a strong domestic manufacturing sector.

“Australians are feeling the pressure when they pay the mortgage, fill up the car or do the weekly shop,” Mr Maguire said.

“There is a good lesson to learn here. Every time there is a global disruption, whether it’s COVID, conflict in the Middle East or rising energy prices, Australia is reminded why it matters that we can make things here at home.”

Mr Maguire said food and grocery manufacturers continue to face high costs for energy, transport, packaging and ingredients, even if inflation begins to moderate.

“Food and drink inflation has eased from previous highs, but many of the costs faced by manufacturers remain elevated,” he said.

“When oil prices rise, it’s not just petrol that is affected. It increases the cost of transport, packaging and production right across the economy and this takes time to flow through to prices at checkout for consumers.

“Nobody wants higher prices, but there is no switch we can flick to bring costs down overnight.”

Mr Maguire said higher interest rates were adding further pressure by making it more expensive for manufacturers to invest in new equipment, technology and production capacity.

The food and grocery sector is calling on government to back its manufacturing sector by improving productivity and lowering the cost of doing business through offering tax incentives and cutting red tape.

“The more food and grocery products we can make here in Australia, the stronger and more resilient we will be when the next disruption comes.”

Food and grocery manufacturing employs more than 301,000 Australians, supports one in three manufacturing jobs and contributes $183 billion to the Australian economy.

“Australia has the people, the capability and the businesses to do more manufacturing locally,” Mr Maguire said.

“The long-term answer is making it easier and more affordable to make food and groceries in Australia.”

Contact
Zandi Shabalala
media@afgc.org.au
0430 051 575