Food prices are likely to continue climbing as the fallout from the war against Iran ripples from farms through to the nation’s grocery distribution system, the Reserve Bank’s chief economist has warned. Source: Sydney Morning Herald.
With Liberal leader Angus Taylor ramping up his attack on the government’s economic credentials as research suggests low productivity was costing the country $35,000 a person in lost income, Sarah Hunter used an address on Wednesday to argue that major supply shocks such as the war had become more common and more disruptive over the past two decades.
Dr Hunter said the current oil shock had probably increased the chance of higher underlying inflation even if there was a spike in unemployment, which is traditionally associated with a reduction in price pressures.
She said households had been forced to endure higher prices to fill their vehicles with petrol, noting that prices were likely to climb for other essentials as the fallout from the war lingered and pushed up the cost of farm production, food processing and transport.
“[Households] may well have to pay more for their food – they need to eat,” she told the Australian Conference of Economists in Canberra.
Meanwhile, higher oil prices continue to be a major concern for the International Monetary Fund, which on Wednesday released its latest outlook for the global economy, which is now expected to expand by 3 per cent this calendar year. This is a 0.1 percentage point downgrade on its April outlook.
Among developed nations, growth is expected to be 1.7 per cent this year, and 1.8 per cent in 2027, with Australia forecast to be one of the strongest.
Treasurer Jim Chalmers said the budget and the government’s plans for tax reform and productivity improvement augured well for the economy.
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Less pain at the petrol pump, but more pain is coming on grocery bills (By Shane Wright, SMH)
