A record-strength El Niño is expected to raise food prices in Australia. Experts say this could strain household budgets and complicate inflation control.
Key Weather Risks in Growing Areas
Eastern Australia’s farming regions face hot and dry weather. This is identified as a key factor affecting food prices over the next 12 months.
Michael Harvey of Rabobank research says these conditions pose a real risk of rising food costs.
Wheat and Feed Grain Outlook
A strong winter wheat crop is expected this year. This could help ease some price pressures.
But feed grain costs and downstream impacts will be closely watched, especially in the final quarter of the year.
Global Commodity Price Trends
Weather shocks and supply issues have already driven up global commodity prices.
- Diesel prices are rising, increasing farming costs.
- Fertiliser supply disruptions will keep prices higher than normal.
Dennis Voznesenski of the CBA says a third of global grain exports are currently blocked. This is due to attacks on Black Sea ports.
Recent Price Increases in Australia
Prices for bread, cereals, dairy, and eggs have risen sharply over the past five years.
That compares to only 3–6% increases in the five years before 2021, according to ABS data.
Impact on Inflation and Households
Reserve Bank of Australia officials are concerned about rising food prices. This could add to inflation pressures.
Jonathan Kearns of Challenger says El Niño is not a major driver of inflation.
Labour, freight, and packaging costs have a bigger influence on supermarket prices.
Still, any rise in food prices would hurt households already facing a cost-of-living crisis.
What to Watch Next
Key developments include:
- Final quarter crop and feed grain data.
- Progress in global grain exports and port disruptions.
- Price trends in dairy, meat, and cereals.
These will help determine if El Niño contributes to broader food inflation.
For more on how inflation affects spending, see our mortgage trends article.
For the original report, visit The Guardian’s article.
Sources & further reading
AI-generated illustration.
