A rise in the cost of living, farm labour challenges, and increased production costs have created an historical spike in the price of dairy products.

Everyday staples, such as milk and cheese, have increased in price by approximately 15 per cent from March 2022, the Australian Bureau of Statistics has reported, bringing a two-litre carton of milk up to $3.10, an 83 cents jump from 2010 prices.

Not only is the cost of dairy products on the rise, but many consumers have felt the brunt of inflation in their weekly shop, as other grocery staples have also seen a rise in cost. Bread and cereal products follow closely with an increase of 11.8 per cent since March 2022.


Since the Christmas quarter, food products not elsewhere classified, such as coffee, tea, health supplements and ready-made meals have increased by 3.2 per cent, alongside non-alcoholic beverages which saw a 3.3 per cent increase.

The graph below shows an increase in grocery items from the previous quarter in comparison to the annual increase from 2022.

Source: Australian Bureau of Statistics

The cause of this increase narrows down to several key factors. The first is attributed to Australia’s rising cost of living, which has increased by 5.1 per cent since March 2022, the highest increase recorded since 2000.

Challenges in farm labour and dairy production have also led to a hike in dairy prices. As the fourth largest rural industry in Australia, a 3.4 per cent decline in milk production from 2021 has hit dairy farmers hard.

The functioning of dairy farms is decreasing rapidly throughout Australia, with only 4,420 dairy farms remaining open. According to Dairy Australia this has subsequently led to a decrease in employees, significantly affecting the drop in dairy production.

Source: Dairy Australia

Alongside the drop in farms, increase in production costs have also contributed to the rising cost of dairy products. Despite global dairy prices declining, due to low local supply, farmgate milk prices have increased and remain well above the global average.

Dairy analyst Michael Harvey has predicted dairy costs in stores will remain high for a while.

“If you see a price increase, it’s likely to be there for a longer period of time because it takes longer for price changes on the global scale to feed through to the consumer,” Mr Harvey said.

“It is unprecedented how high the prices for those commodities are in the global market.”

Credit: Ashleigh McMurdo & Imogen Grant