Australians are bracing for the biggest cost-of-living crisis in 30 years to get even worse as widespread flooding across Australia’s east coast threatens yet another spike in food prices.
Fresh foods like citrus fruits, winter vegetables and protein like poultry are now facing shortages as analysts predict torrential rainfall in Victoria, NSW and Tasmania could spoil harvest season.
Treasurer Jim Chalmers sounded the alarm on Monday, warning that Australians must prepare for higher grocery bills as the fallout from the nation’s latest flooding crisis becomes clear.
“We’re talking here about some of the best growing and producing country in Australia, and it has been seriously impacted,” Dr Chalmers told reporters in Canberra on Monday.
“These [floods] are likely to push up the cost of living when Australians are already under the pump.”
It comes after new data from UBS on Monday revealed supermarket prices have already risen about 8 per cent over the September quarter – much faster than the June quarter’s 10-year high.
Higher food prices
Farming and livestock communities are starting to assess the effect of Australia’s latest set of flooding disasters, particularly in Victoria, where busted riverbanks caused mass evacuations.
Anne Beaty, a poultry breeder from Shepparton in northern Victoria, said the region had been hit hard over the weekend, with residents bracing for more rain later this week.
“Have a think about [the] farms where your food actually comes from: It does come from up in this area and a lot of the farms are flooded – some people can’t get their milk out,” Ms Beaty said.
“That will eventually affect people in their supermarkets down in Melbourne, unfortunately.”
The latest round of flooding has hit key growing regions for citrus fruits, alongside livestock and dairy heartlands, said senior dairy and consumer food analyst at Rabobank, Michael Harvey.
The effect of flooding on farming communities was still becoming clear, but he noted that both winter harvests and summer planting periods could be affected by the heavy rainfalls.
“We were already expecting further price increases to be coming through,” Mr Harvey said.
“This is only going to add upside risk to it, through the impacts on livestock and horticulture like citrus.
“You’re looking at winter crops that would have been harvested soon, but also with the amount of rain and soil moisture it might be problematic for some summer crops,” he said.
UBS data on Monday showed fresh food prices at Coles and Woolworths have risen by 9 per cent over the September quarter, while dry grocery prices increased 7.7 per cent.
Inflation at Coles rose from 5.5 per cent to 8 per cent over the period, while it increased from 5.6 per cent to 8.3 per cent at Woolworths, UBS analysts found.
Those increases are several times higher than household income growth over the same period, meaning the real cost of essential food purchases is skyrocketing for households nationwide.
Mr Harvey said food inflation has yet to peak, with analysts expecting prices to continue rising faster through to the end of the year.
A Woolworths spokesperson said the supermarket is still assessing what impact the most recent floods will have on fresh food supplies.
“As this significant weather event unfolds, we’re in contact with our suppliers and growers in northern Victoria to understand the impact and how we may be able to support them,” the spokesperson said.
Coles said floods can be “devastating” to farmers and food suppliers.
“We are supporting farmers, suppliers and local communities affected by Victorian floods, and are working closely with them to minimise any potential impacts on supply,” a Coles spokesperson said.
Expect a conservative budget
Prime Minister Anthony Albanese on Monday acknowledged the latest floods will affect inflation, suggesting the heavy rainfall could spoil what was shaping up as a good harvest.
“The Victorian food basin there is such a rich area … [and] poultry and other areas will be affected … so we just have to work with farmers and with the sector,” he said.
“The impact will feed into higher prices, most unfortunately, at a time where inflation has already been rising.”
But despite rising inflationary pressures the government has flagged a conservative budget next week that will avoid “spraying cash” on cost-of-living relief for households.
There will be extra funding for child care, skills and education, but the Albanese government is set to avoid cash handouts of the type delivered by the former government.
