Treasurer Jim Chalmers has advised the cost of living crisis is expected to intensify as the effects of the recent floods trickle down into the pockets of Australians through the price of groceries.
Significant flooding has left devastation in its wake across parts of Victoria, New South Wales and Tasmania, with more rain expected to follow and continue to wreak havoc.
We see the best of Australians in the harshest of Australian conditions. Big thank you to everyone looking out for each other and looking after each other during these latest floods #auspol #ausecon pic.twitter.com/hNp5Z6jPl9
— Jim Chalmers MP (@JEChalmers) October 17, 2022
Speaking on the Today Show, Chalmers said the flooding events have put a lot of farmland, crops and livestock at risk.
“It feels like the hits keep coming in lots of ways,” Chalmers said.
“Our focus is primarily on the human element of that – what it means for people in these affected communities – but there will be an impact on the economy as well, and there will be an impact on grocery prices.
“We’re talking here about some of the best farmland in the world producing some of the world’s best food. Obviously, when it goes underwater, there’s a lot of crops and a lot of livestock at risk.
“We need to understand that it’s heartbreaking for people and often where people do it the toughest is when the floodwaters recede. But we need to recognise that it’s tough for people in an ongoing way.
“When it comes to the cost of living, we have seen this before unfortunately. When it comes to crops, most recently in southeast Queensland not far from me, where we saw prices in our supermarkets go up because we lost so much of that season’s crop. And that’s what we’re facing again.”
The Treasurer said it was hard to predict exactly what will come until the damage from the disaster is clear, but assured Australians that the government is working hard on addressing the economic crisis in the Federal Budget, to be revealed on October 25.
“We don’t yet know what the full impact will be on the cost of living. We don’t yet know how many billions of dollars this flood and its recovery will cost,” he said.
“We’re still counting the costs and assessing the damage, but there will be a substantial impact on the cost of living. There will be a substantial impact on the Budget. There’s no use pretending otherwise.
“We’ve got a responsible cost-of-living plan, which goes to things like cheaper childcare, cheaper medicines, getting wages moving again, paid parental leave implemented in a staged way.
“But we’ve been pretty upfront with people and said that what we don’t want to do, and we’ve seen this overseas, is provide cost-of-living relief in a way that just creates more inflation and pushes interest rates up higher than they would otherwise be.”
Chalmers’ warning comes as the Reserve Bank of Australia raised the cash rate for the sixth month in a row, to 2.6 per cent and is expected to reach 3.75 per cent in 2023.
Now, major energy retailers are issuing their own warnings, saying energy costs can be expected to rise by at least 35 per cent.
These expected changes in the cost of living are sure to be felt by senior Australians, as recent data from the Australian Bureau of Statistics (ABS) indicated that older Australians are already suffering the most from the rising cost of living with pensioners experiencing an annual household living cost of 4.9 per cent.
Head of Prices Statistics at the ABS Michelle Marquardt said the main culprit affecting older Australians is the increase in grocery prices, but household costs also played a large role.
“These households were also more affected by increases in housing costs, as they have relatively higher expenditure levels on utilities, maintenance and repair, and property rates,” Marquardt said.
Adding further fuel to the fire were recent findings from the Association of Super Funds of Australia (ASFA) that revealed retirees will now need to spend more in order to retire “comfortably”.
The ASFA Retirement Standard June quarter 2022 figures, released on Thursday, August 18, found couples aged around 65 need to spend $66,725 per year to enjoy a comfortable lifestyle in retirement while singles would be met with an annual cost of $47,383.