Australia faces the most severe El Niño on record, which could push food prices higher this year, experts warn. The Bureau of Meteorology predicts the event will peak in late spring or summer and reach levels above the warmest observed since 1950. The rise in food costs would add to households already dealing with a post‑pandemic grocery bill surge and would complicate the Reserve Bank’s efforts to curb inflation.
Michael Harvey of Rabobank research says the hot, dry conditions expected in eastern Australia’s key growing regions will be a major factor in food pricing over the next 12 months. He notes that while dairy and meat prices are easing after recent rises, wheat and feed grains could see volatility. Harvey says the full impact will become clear by the year’s final quarter.
Global commodity prices are already reflecting weather‑related threats. Wheat prices have risen about a third since July, compared with a 9% rise in Australia, and Brent crude has climbed 35% since July, pushing diesel prices higher for farmers. Fertiliser suppliers warn of supply disruptions that will keep costs structurally elevated. Meanwhile, grain exports from Russia and Ukraine are stalled after attacks on Black Sea ports, with a third of global grain exports stuck.
Over the past five years, Australian supermarket staples such as bread, cereals, dairy, jams and eggs have risen 28–30%, compared with a 3–6% increase in the preceding five‑year period. The Reserve Bank is concerned that a severe El Niño could further lift food prices, adding to an entrenched cost‑of‑living crisis. Economists say the effect on overall inflation may be modest, but any extra food cost is unhelpful.
