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The cost of everything

This Kiwi summer could be an expensive one.

Why?

Well it would appear we're about to encounter a perfect storm, a congruence of factors that look set to hike the cost of living by a significant amount.

While any single factor involved would be enough to see prices spike, the fact that so many are all converging over the next six months may well cause a world of hurt for those on low or fixed incomes.

Let's look at those factors, what's caused them and what their effect will be on your back pocket.

First up is the obvious one - El Nino.

If predictions continue to be accurate, the mega/super/godzilla El Nino currently underway will be disrupting weather patterns in unfavourable ways.

Most of the predictions I've read indicate that North of the equator, the next six months will likely see continued extremes including significant flooding in some areas and ongoing drough in others.

Here in Godzone we're expected to have hotter than usual temperatures accompanied by lower than normal levels of rainfall.

The bottom line is that food production in both hemispheres could well be significantly reduced and, thanks to the laws of supply and demand, that'll mean higher prices.

Then there are the various wars that are going on.

The war between the US and Iran has shut down a key trade route for oil and the recent destruction of the Saudi oil pipeline facility has further reduced that region's ability to export the crude on which our civilization has been built. Even before the Saudi pipeline attack we've seen the effects of this conflict on fuel prices. Things are obviously going to get a lot worse before they get better.

What people sometimes forget is that we also use oil to make critical supplies such as fertilizer as well as the diesel on which our farming industries are so dependent. When these things go up in price, so does our food.

Next on the list is the cost of shipping.

Not only is the fuel used by ships and aircraft skyrocketing but we also have the double-whammy that some critical routes are now far more expensive. For example, the cost to pass through the Panama Canal has been hiked by over 15 times its previous average. This has been driven primarily by the effects of El Nino which as drastically reduced rainfall in this part of the world but is also because (once again) the laws of supply and demand.

The cumulative effect of these factors will see food prices in our export markets rising significantly, especially for imported products -- such as those from New Zealand.

Based on past observations, I fully expect our supermarkets and monopoly suppliers to take advantage of these soaring shelf-prices overseas. If a 1Kg block of Mainland Tasty Cheddar goes up by 50 percent on a UK supermarket shelf due to shipping costs, you can expect to see the same sort of rise at New World or Woolworths. When challenged, they'll tell us that we have to compete with the price paid by export customers.

Yeah, right!

So the savvy Kiwi will be already stocking up on foods that have a good shelf-life and perhaps considering the switch to an EV rather than a dino-guzzler. It probably won't hurt to set aside some part of your garden to food production and maybe divert some of the water that falls on your roof to a tank so you can still irrigate in the predicted summer drought.

Carpe Diem folks!

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