Australians have been warned to brace for higher prices in supermarkets, cafes and shops — and even shortages — in coming weeks as the deepening fuel crisis begins to ripple through supply chains.
Farmers also fear that struggles to get fertiliser supplies, which are also impacted by Iran’s near-closure of the Strait of Hormuz, will affect imminent crop sowing and lead to even more shortages down the track.
The latest inflation data will be released on Wednesday, although it only covers the period to the end of February, so won’t pick up the impact of the war.
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But tropical fruit prices were already on the rise because of the floods in Queensland, while strong US demand for Aussie beef — despite Donald Trump’s tariffs — has driven up costs at the butcher.
Dairy, frozen meals, seafood, meat, fresh fruit and vegetables, and beverages are likely to be hardest hit from the fuel shortages and price hikes — effectively cutting across everyone’s shopping trolleys.
Freight business owners are already making decisions to park their trucks and lay off drivers because they can’t continue to absorb rocketing fuel costs, the National Road Transport Association said.
Chief executive Warren Clark said unless governments were able to help with those costs, it was only a matter of time before the burden would be passed on to shoppers.
“If it’s on your table, it has come from the back of a truck,” he said.
“At the rate the fuel prices are climbing, we have to be proactive and take decisive action now – especially for smaller operators and those in regional areas.
“Otherwise, I can absolutely guarantee we will see a return to COVID-like conditions with empty supermarket shelves and the price of groceries going through the roof. You’ll see bananas at $15 a kilo just to pay for the fuel increases.”
He called for disaster relief-style payments for freight companies and the suspension of road user charges.
Suggestions for freight subsidies were raised last week during a transport sector roundtable, but Transport Minister Catherine King said while it wasn’t off the cards, the Government wasn’t looking at that yet.
Further increases in groceries will hurt people on lower incomes and welfare payments the hardest, ACOSS chief executive Cassandra Goldie warned.
They were already struggling after years of inflation running hot and had no buffer.
“They can’t cut back on luxuries, cancel streaming subscriptions, choose to cook at home instead or drive less to save money. They are already skipping meals, rationing medication and struggling to keep a roof over their head,” Dr Goldie said.
Treasurer Jim Chalmers said on Monday that the Government was acutely aware of the effects on people’s wallets, which will worsen the longer the war drags on.
“We do know and we do understand that Australians are feeling the pressure around the kitchen table and especially at the petrol bowser,” he told Question Time.
The National Food Council met for several hours on Monday to work through the various supply chain problems spiralling out from the US-Israel-Iran conflict that has crippled a key shipping route for oil and fertiliser.
It commissioned a national food supply chain assessment, with an urgent focus on diesel before expanding to look at fertiliser and crop protection products.
“Our farmers and producers feed millions of people both here and abroad, but events like the conflict in the Middle East reaffirm why we cannot be complacent,” Agriculture Minister Julie Collins said.
But the National Farmers Federation said the industry needed a clear, actionable and agriculture-specific plan to help farmers now, rather than wait weeks and months for that assessment.
“We are hearing about impacts being felt right across our membership from grain growers who need to plant, cattle that need moving and seafood that needs to be caught,” NFF president Hamish McIntyre said.
“We know every single Australian is feeling the pinch at the pump, but if these price hikes continue, it could mean the difference between a farmer planting a crop or leaving the paddock bare.
“We don’t want to speculate what this will mean for families at the supermarket, but if things don’t turn around quickly and farmers are forced to cut production or scale back plantings, it is reasonable to expect that it could lead to pressure on food prices.”
Farmers whose businesses are disrupted can apply for concessional loans through the Regional Investment Corporation, which has $256 million available to the end of June and $1 billion more beyond then.
The most exposed products would be those that with long transport distances, such as frozen food, dairy and ready meals, and those that were heavier like beverages and fresh produce, because they had the highest transport costs, Rabobank’s agribusiness analysts said in a research note.
Commonweath Bank researchers said if the Strait of Hormuz remained closed, “there is likely to develop a significant fertiliser shortage” which could change what farmers dceide to plant.
Ms Collins said there was “enough fertiliser either in Australia or on ships in terms of the initial cropping season” but the Government was keeping an eye on reports some cargoes bound for Australia had been delayed.
