The most severe El Niño weather event on record threatens to push food prices higher in Australia this year, according to experts. This could add pressure to households already facing increased grocery bills.
The Bureau of Meteorology has forecast that El Niño will peak in late spring or summer, reaching levels beyond those observed since reliable records began in 1950. Michael Harvey, a consumer food analyst at Rabobank research, stated that predicted hot and dry weather in key eastern Australian growing areas is a significant factor affecting food pricing over the next year.
The Food and Agricultural Organisation has reported that rising weather-related threats are already contributing to high and climbing global commodity prices. Harvey noted a risk of food inflation reaching consumers due to volatility and potential cost re-escalation in the food system.
Dennis Voznesenski, CBA’s agricultural economist, highlighted that global wheat prices have increased by approximately a third since the beginning of July. Additionally, the global oil benchmark, Brent crude, surpassed US$97 a barrel on Monday afternoon, marking a 35% rise since early July, which impacts diesel costs for farmers.
Jonathan Kearns, chief economist at Challenger, indicated that while a clear link between El Niño and higher food prices is not easily shown, any extra increase from food prices would be unhelpful for overall inflation.