Federal Treasurer Jim Chalmers says widespread flooding across the east coast will force inflation above 8 per cent for fruit and vegetables for the next six months.
Mr Chalmers is preparing to deliver his first budget next Tuesday, and says the flooding disaster will hit the nation's economic growth by 0.25 per cent in the December quarter.
Some of Australia's most productive agricultural land has been inundated by floodwaters across New South Wales, Victoria and Tasmania.
"The big ongoing contributor to inflation increasingly will be the impact of these natural disasters and the impact of higher electricity prices," he said.
"What we're seeing in these flood affected communities will be felt over the December quarter and the March quarter.
"We know these natural disasters have come at the worst possible time for farmers and for Australians who are already under the pump."
Mr Chalmers said it was too early to put an exact figure on the cost of the floods in next Tuesday's budget.
"We do know that there will be consequences for the economy and the budget," he said.
"What we are trying to do, at this late stage … is to include some of those preliminary assessments of the likely impact in the numbers that are released on Tuesday night."
Millions of Australians are currently facing a cost-of-living crisis as wages struggle to keep up with soaring inflation.
In June, inflation hit 6.1 per cent, a 21-year high, and while wages in some industries are beginning to rise, economists generally expect it will take the best part of two years for wages growth to exceed the inflation rate.
Overall, inflation is forecast to hit 7.5 per cent by the end of the year.
The treasurer said it was not all bad news, with some things like the rising cost of petrol cooling off faster than expected.
"It's swings and roundabouts," he said.
Mr Chalmers also said the government had put $3 billion aside for any additional disaster payments the Commonwealth would have to make in the aftermath of the ongoing flooding.
