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Drought and bushfires blamed for rising food prices in Australia

Major Australian food retailers blame drought and bushfires for the rising food costs. However, the coronavirus pandemic may prompt price increases, if supply chains are disrupted.

IBISWorld analyst Tom Youl said consumer price index data revealed fruit prices rose by 6.8 per cent in the three months to December 2019. “Anecdotally, there has been a lift in fruit prices of late,” he said. “This seems to be mostly supply-driven, with shortages of some produce lines.”

According to Youl, most meat, fruit and vegetables sold in Australian supermarkets is sourced from local suppliers: “In relation to COVID-19, imported products may report modest price rises. Most imports are fruit including kiwifruit, oranges, table grapes and avocados.” But Youl said the drought and bushfires were expected to have a greater impact on the price of produce such as cauliflower, broccoli, spinach, rocket, potato and pumpkin.

“Recent rainfall and a reasonable rainfall outlook, according to the Bureau of Meteorology, is likely to encourage livestock farmers to rebuild herds,” he said. “This typically results in increased meat prices due to a downward trend in supply through meat processors.”

In the longer term, Mr Youl said the CPI might fall as a result of weak demand although fresh food prices may rise as a result of output constraints.

A spokesman for AUSVEG, the industry body for the vegetable and potato industries, told there had been reports of a decrease in supply of some vegetables, including capsicums, cucumbers and zucchinis. “This could be linked to the impacts of drought, water access and extreme weather and heat events in growing regions, leading to reduced supply.”

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