Australia's food supplies and costs have been battered by the ripples from Russia's war on Ukraine, the pandemic, power prices, inflation, disease, hiccups in freight, labour shortages and the devastating floods. War has pushed up the prices of fertiliser, fuel and transport.
Lam said prices have been rising since the start of the pandemic as pressures from disruptions in supply chains and high freight costs built up. The rise in energy and fuel — largely exacerbated by the war in Ukraine — also contributed to the cost of transporting food, he said.
Aussies are being warned the cost of groceries is likely to spike next year with a major supply shortage set to hit the country.
So why is the cost-of-living in Australia so high? One of the major reasons is inflation. A measure for household inflation, the Consumer Price Index, or CPI, increased by 2.1% in the first quarter of this year and 5.1% annually, according to data compiled by the Australian Bureau of Statistics (ABS).
The cost of food will stay high next year, experts say – but Aussie favourites such as coffee are expected to drop in price. A report by agricultural bank Rabobank said shoppers as well as food producers face a "challenging" year, after the cost of living shot up during 2022.
Executives at large food manufacturers and analysts expect inflation to hover around this level for the rest of 2022. Next year, the rate of food inflation is expected to moderate — but that doesn't mean prices are going to drop. Once prices hit a certain level, they tend to stay there or go up, but rarely down.
USDA says growth in food prices will slow
As a result, the USDA predicts that food prices will rise between 3% and 4% in 2023. If the prediction is correct, it is a much slower growth than we've seen this year, but it still means the cost of groceries will go up.
The cost of living in Australia is rising – quickly – and it's expected to keep rising into 2023. We had 8 cash rate hikes (from 0.1% to 3.1%) in 2022, and the latest quarterly inflation figure was 7.3%.
In Australia, the federal government and Reserve Bank have forecast that inflation will peak at 7.75% in the December quarter of 2022. Inflation is expected to start falling from next year and continue through 2024.
There is no single cause of inflation. Prices generally increase at a faster rate as the economy strengthens. As unemployment falls, firms are forced to pay higher wages, bolstering consumers' purchasing power and increasing demand for goods and services.
Even the future of Australia's mighty $49 billion agricultural sector is looking shaky. Thanks to climate change, production of major export commodities such as wheat, beef, dairy and sugar will fall as much as 19 per cent by 2050, the Climate Group's report found.
The war in Ukraine, the pandemic, and climate change are three major factors that have caused food prices to rise, not just in Australia but across the world.
There are a wide array of indicators showing that inflation will not only fall through 2023 but will drop back towards the RBA's 2-3 per cent target about as quickly as it rose from below 2 per cent to 8 per cent in 2021 and 2022.
Which country is the cheapest? Let's do a quick comparison on global grocery prices: In the US, food is 24.85% cheaper.
Silks' braised abalone with webbing from duck's feet: $1380 per kilogram To spend as much money on food as fast as you can, head to Crown's high-end Cantonese restaurant Silks and order a portion of the braised abalone with webbing from duck's feet.
Caldwell estimates that the inflation rate will average around 1.5% between 2023 and 2025. “While consensus has largely given up on the 'transitory' story for inflation, we still think most of the sources of today's high inflation will abate, and even unwind in impact, over the next few years,” Caldwell says.
Australia could soon see a “sizeable” crash in the housing market, according to a new report from the International Monetary Fund which warns that housing affordability is declining rapidly.
The pain is set to continue for many more months to come unless the Reserve Bank swings 180 degrees and starts cutting interest rates. Contrary to the “hopeium” out there, there is currently zero evidence that the great Aussie housing crash is bottoming out.
Estimates suggest the average Sydney home will be close to $1.8 million, up from $1.6 million. Apartments will also break the price ceiling up from an average of $780,000 to an inconsolable $1.26 million.
Saving for rent, the average Australian family of four spends around $4700 per month on basic living costs. For singles, it's around $1300 per month. Splitting expenses in a shared household is definitely the way to go if you're trying to keep costs down, whether that be with family or flatmates.
The WFP predicts that by 2023 there will be a shortage of wheat and corn, which are two staple products in the food supply chain. The reports also estimate that these shortages will increase global food prices and could even trigger a new global recession.
In domestic currency terms, however, food prices remain elevated due to currency deprecations. Food prices are expected to fall 5% in 2023 before stabilizing in 2024.