Record-breaking El Niño threatens higher grocery prices in Australia, analysts warn
A record El Niño is forecast to intensify, potentially raising food costs and adding pressure to households already coping with rising grocery bills while complicating the RBA’s inflation strategy.
The Bureau of Meteorology has warned that one outlet El Niño will reach unprecedented warmth, surpassing any level recorded since 1950, and is expected to peak in late spring or summer. Consumer-food analyst Michael Harvey of Rabobank highlighted that the anticipated heat and dryness across eastern Australia’s agricultural zones could influence food pricing over the next year, especially for wheat and related feed grains.
The Food and Agricultural Organisation notes that weather-related threats are already reflected in rising global commodity prices, while global wheat benchmarks have risen roughly a third since July, outpacing the 9 % increase seen domestically. Oil prices have climbed to near US$97 a barrel, raising diesel costs for farmers and prompting fertilizer supply concerns. Meanwhile, grain exports from Russia and Ukraine are stalled due to attacks on Black Sea ports, leaving a third of global grain shipments delayed. Although dairy and meat prices are starting to fall after recent spikes, the overall pressure on supermarket staples— which have risen 28-30 % over the past five years—could add to the cost-of-living squeeze and influence the Reserve Bank of Australia’s interest-rate considerations.
Why it matters
Higher food prices could deepen household budget pressures and affect the RBA’s fight against inflation.
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