We’re being warned the price of food, coffee and chocolate could all be about to rise because of the weather. A looming El Niño system is stoking fears of a hit to the Australian and global economy.
El Niño Set to Impact Food Prices
A looming El Niño weather system is stoking fears of a hit to the Australian and global economy, with warnings that the prices of food, coffee, and chocolate could soon be on the rise. The Reserve Bank of Australia flagged the potential for an El Niño-induced surge in food prices at its July 4 meeting.
El Niño is a climate pattern that affects weather globally by causing changes in the Pacific Ocean’s temperature. These shifts can lead to severe weather conditions, including droughts and floods, which can disrupt agricultural production.
According to a recent report by Deutsche Bank, higher food prices are a common theme across El Niño events. The report suggests that the effects of this event extend beyond farms and could impact various sectors of the economy.
The cost of cocoa has already surged to the highest in seven years following a disappointing harvest in the Ivory Coast, a top exporter. This trend could make chocolate more expensive in countries like Australia, which rely heavily on imports. Additionally, fears are mounting over potential impacts on coffee-producing countries, as robusta beans, a primary ingredient in instant coffee, could be affected by extreme weather conditions.
The food industry should be concerned by the potential effects of El Niño, as general inflation has begun to decrease in many major economies, but food prices might continue to rise.
The impact of El Niño on Australia could be particularly significant. Most of eastern Australia’s driest winter-spring periods have occurred during El Niño years, increasing the likelihood of drought. This dry and warm weather could pose significant challenges for Australian farmers and potentially lead to an increase in food prices.
As these concerns loom large, it is essential to monitor the situation closely and prepare for potential impacts on the cost of living, particularly for everyday essentials like food, coffee, and chocolate.
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