Major flooding across NSW will place added to strain to an economy already dealing with soaring levels of inflation.
Tuesday's rate decision by the Reserve Bank has made borrowers feel the pinch, but the damage and coming clean up from the fourth major flooding event in NSW within 18 months, may pose serious concerns about further price rises for essential goods and services.
The NSW Farmers Association warns more than $1 billion worth of produce has been lost within the Sydney region from the floods, which will add extra pressure to domestic supply for a number of fresh produce items already facing shortages.
It may seem like a stretch to link the price of an iceberg lettuce to the RBA's decision to raise the official cash rate by 50 basis points to 1.35 per cent.
But inflation remains a primary driver in what influences the RBA's decision, and a huge part of what influences inflation is the going price for goods and services.
Treasurer Jim Chalmers acknowledged the cost blowout will likely drive up food prices for fresh fruit and vegetables, which are already at "skyrocketing" highs.
He also conceded the flooding events would place more strain on the federal budget, but promised Labor would push through cost of living commitments it promised during the election.
However, questions remain about how much reprieve these measures will bring considering the primary inflation drivers are global supply constraints and commodity shocks caused by the Ukrainian conflict.
So it beggars belief what role fiscal levers will do in cushioning the blow when inflation is set to run at double the RBA's target band of 2 to 3 per cent over the next six to 12 months.
The federal government will also have to brace for higher interest on its own loans which could impact how much money it has at its disposal.
Regardless, the RBA has signalled more hikes will occur in the coming months and has signalled it will take time before monetary policy is able to flush out some of the high inflation, which will help in easing prices.
Shadow treasurer Angus Taylor tried to imply Labor needs to enact a bit of "belt tightening", but stopped short of using the controversial a-word known as austerity.
For a lot of households who have committed to new mortgages in the last 12 months, the pain will be felt by increasing interest repayments.
Perhaps Mr Taylor's "belt tightening" remark should have been directed to mortgage holders too?
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