Soaring food prices are a growing obstacle in the bid to control inflation, with the Australian Bureau of Statistics measuring a five per cent increase in an average basket of groceries.

Food prices are being driven up not only as an ongoing result of the drought but also due to rising world prices driven by demand from China and India.

The latest index of agricultural commodity prices compiled by the National Farmers Federation and Westpac shows prices are 25 per cent higher than a year ago.

Rabobank researcher Tim Hunt said food inflation will continue as items such as red meats and takeaway food are expected to rise.

“Not all recent increases in ingredient cost have at this stage been passed on to consumers,” Mr Hunt said.

Macquarie Bank senior economist Brian Redican said the demand-driven cost pressures made it much harder for the RBA to control inflation.

“With no sign that those cost pressures are moderating, the implication is that the Reserve Bank will have an ongoing challenge to quell inflation,” Mr Redican said.