As Tropical Cyclone Alfred continues to hover off the coast of Queensland and northern New South Wales, concerns are mounting over the potential economic impact of the storm.
With the cyclone expected to make landfall, experts warn that its effects could extend far beyond damaged infrastructure, disrupting agriculture and leading to inflationary pressures.
The destruction caused by Tropical Cyclone Alfred in the Lockyer Valley, one of Australia’s most important farming regions, could result in higher food prices and wider economic consequences.
Ross Greenwood, Sky News’ Business Editor, warned of these potential impacts, according to Sky News Australia.
Lockyer Valley: Australia’s Agricultural Powerhouse at Risk
The Lockyer Valley, located west of Brisbane, is a key agricultural hub, producing around 40 per cent of Queensland’s fruit and vegetables and supplying over 95 per cent of Australia’s winter crops.
Known as “Australia’s Salad Bowl”, this region plays a crucial role in ensuring the stability of the nation’s food supply.
Cyclones bring heavy rainfall, flooding, and strong winds, all of which pose a direct threat to crops and farmland. Any major disruption in this region could significantly reduce the availability of fresh produce, causing a surge in prices.
“If all of a sudden Australia has a lack of fruit and vegetables off the back of this disaster, then that could spike up inflation (and) could certainly spike up the price of fruit and vegetables for the whole of Australia,” explained Ross Greenwood.
Inflation Concerns Amid Fragile Economic Recovery
The Australian economy has been recovering from post-pandemic inflation, which peaked at over seven per cent in December 2022. The Reserve Bank of Australia (RBA) recently lowered the cash rate after nearly a year and a half of holding it steady, aiming to ease financial pressures on households and businesses.
However, a supply shock caused by the cyclone could reverse some of these gains. Food prices have a direct impact on consumer inflation, and disruptions in production could lead to increased costs for consumers nationwide.
“This is the sort of thing that takes you backwards for a period of time,” stated Greenwood.
The Insurance Fallout: Rising Premiums and Coverage Gaps
Beyond immediate economic concerns, the cyclone is expected to have long-term repercussions on insurance premiums.
The Australian insurance market has been facing growing challenges due to climate-related disasters, with rising costs making coverage increasingly unaffordable for many.
Greenwood highlighted that massive insurance claims following disasters often lead to higher premiums, adding financial strain on homeowners and businesses. After major claims, insurers adjust their rates to compensate for losses.
“Australians right now understand that insurance policies have gone up a lot in recent times,” he said.
For those in cyclone-prone areas, securing insurance is becoming increasingly difficult. Insurance expert Marty Sadlier warned that homeowners in affected regions may struggle to obtain coverage in the future, as insurers become more reluctant to take on high-risk policies.
Uncertain Storm Path Raises Concerns
Meteorologists have noted that Tropical Cyclone Alfred has stalled off the Queensland coast, raising concerns that the system could gain additional strength before making landfall. The storm’s unpredictability adds further uncertainty, making it difficult to assess the full extent of the damage it may cause.
As communities prepare for the storm, emergency services and local authorities are urging residents to take necessary precautions. In the coming days, the focus will shift from preparation to recovery, with authorities assessing the economic impact and the need for government assistance.
