The soaring cost of living is hitting one of the world’s fussiest consumers: Australian coffee lovers. – Photo: AFP
The soaring cost of living is hitting one of the world’s fussiest consumers: Australian coffee lovers.
Coles Group Ltd., the country’s second-largest supermarket, said its A$1 (RM3.11) in-store coffee had "never been more popular” when it released full-year earnings Wednesday. That’s a stark shift for a country that prides itself on its cafe culture and where customers often think nothing of forking out A$5 (RM15.56) for a ‘flat white.’
In further signs that inflationary pressures and rate hikes are hitting home, Coles said it was seeing customers buy "significantly more” of its A$1 pasta offering. Fast-food outlet Dominos Pizza also gave a glimpse into its Australian customers’ spending habits on Wednesday, saying it was balancing higher menu prices with "inflation crushers.”
Australians are bearing the brunt of rapid-fire interest rate hikes as the central bank races to tame the hottest inflation in two decades. The nation’s heavily-indebted households are tightening their belts as they also face the threat of a property downturn on a scale unseen in 30 years.
Most economists expect the RBA (Reserve Bank of Australia) will raise rates by a half-percentage point for a fourth straight meeting next month to bring the cash rate to 2.35%. Policy makers expect inflation will peak at just below 8% later this year.
Investors are being easily rattled. Coles’ shares tumbled as much as 5.2% in Sydney following the company’s insights on cost-of-living pressures.
"The need for the group to evaluate and respond quickly to a changing operating environment has never been more important as we focus on ensuring value for customers in an inflationary environment,” Coles Chairman James Graham said in the earnings statement. – By Keira Wright/Bloomberg
