Grocery hikes loom as fuel crisis hits supply chains
Shoppers are being warned to prepare for inevitable price increases as supply chains face major oil disruptions as the conflict in Iran continues.
Supply chain management and logistics expert Elizabeth Jackson said it’s no longer a question of whether higher costs will be passed on to consumers, but when.
“Every kilojoule of food from a farm in Australia is transported by a diesel-powered vehicle,” Dr Jackson told AAP.
“From the most basic foods (fresh fruits and vegetables without any processing) to the most processed export foods are dependent on transportation systems.
“They are also dependent on diesel for mechanization for food production, such as tractors.”
Price increases are likely to start with fresh produce due to short supply chains and the need for constant transportation.
The increases were most likely possible over two to three weeks in a “slow burn” rather than a sudden surge.
“The fresher the produce, the faster we will see prices increase,” Dr Jackson said.
At least 107 petrol stations in NSW have run out of diesel, with more than 40 reporting no fuel left.
Dr Jackson said this highlighted the need for stronger fuel resilience in Australia, including greater investment in alternative energy sources such as biofuels rather than continued reliance on fossil fuels.
In the short term, governments are limited in what they can intervene beyond managing supply, he said.
Coles said it would review more frequently how much it pays companies that deliver food and groceries to its stores.
The supermarket giant did not say whether this would lead to an increase in prices for shoppers.
“We will temporarily increase the frequency of reviewing the fuel component of our freight rates from monthly to twice monthly to reflect changing fuel costs more quickly and fairly,” a Coles spokesman said.
“In the current environment, this means transport providers are more able to absorb rising fuel costs.”
Commonwealth, state and territory leaders will meet next week for another national cabinet meeting on shortages.
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