Escalating fuel prices are placing significant pressure on Australian households, threatening to push many families to a financial breaking point as grocery bills are set to climb even higher.

The ongoing conflict involving the U.S., Israel, and Iran, now in its fourth week, has caused a spike in fuel costs. Iran’s blockade of oil supplies is intensifying this strain, with Australian farmers cautioning that these increased costs may soon impact consumers at the checkout.

Kim McDonnell, CEO of the food waste application Saveful, has indicated that staples such as fruits, vegetables, and dairy products are likely to see the most immediate price hikes.

“Farmers are predicting grocery prices might rise by another 16 percent in the coming month, which is an astonishing increase and could be the tipping point for many families,” McDonnell explained in an interview with the Daily Mail on Wednesday.

She highlighted that families are already grappling with the high cost of living and climbing mortgage rates. The added burden of surging grocery expenses could prove overwhelming for many households.

McDonnell also warned that families might face difficult decisions at the checkout, particularly if supermarkets decide to implement temporary purchase limits to prevent panic buying, reminiscent of measures taken during the Covid-19 pandemic.

‘Families are already making difficult decisions about nutrition and trying to balance healthy choices versus budgets,’ she said.

‘We’ve seen people start hoarding fuel when the war first broke out… I think people are very conscious when they go into supermarkets now and already see that the shelves aren’t as full as they used to be. 

CEO of food waste app Saveful, Kim McDonnell, said she expects to see many families forced to make some ‘heartbreaking’ compromises at the checkout

Fruit, vegetables and dairy products could be among the first groceries to go up in price (pictured, empty shelves during the Covid pandemic in Sydney in 2022)

‘So frozen is always a good option, if you have to choose between fresh and frozen.’

For those who want to save cash at the checkout, Ms McDonnell said shoppers should plan their shopping list, take note of estimated shelf-life dates, and ensure they are storing food properly at home to make it last longer.

She also encouraged households to batch cook and meal plan for the week ahead. 

‘None of us buy food with the intention of wasting it. Food is such a precious commodity. None of us can afford to waste it,’ she added.

The warning comes days after Australia’s peak farming body warned winter food production could be halved if there isn’t enough urea (which is used as fertiliser) transported to farms in time to secure the winter crop.

‘Diesel drives food production across Australia, so we need to make sure it’s available for our essential services, number one, but then our farmers and food producers after that,’ National Farmers’ Federation president Hamish McIntyre told ABC Radio.  

‘If we can’t get our in-crop requirements after May, the winter crop in Australia could be halved.’

Meanwhile, corporate giants using subcontracted delivery drivers will front the Fair Work Commission on Wednesday as part of a union bid to force them to cover surging fuel costs caused by the conflict in the Middle East. 

Australia’s peak farming body warned winter food production could be halved if there isn’t enough fertilser is transported to farms in time to secure the winter crop

The fuel crisis is threatening to choke supply chains and disrupt deliveries nationwide (pictured, empty fuel pumps at a service station in Melbourne)

The Transport Workers Union and the Australian Road Transport Industrial Organisation have made a joint application for gig workers, owner-drivers and transport businesses to be able to pass surging fuel bills back on to major corporate clients like Coles, Woolworths, Aldi, McDonald’s and Amazon. 

Woolworths has already lifted the levy drivers can charge food and grocery manufacturers for transporting their goods to distribution centres. It has also changed its fuel levy reviews from monthly to fortnightly. 

Coles will review its fuel levy for truck drivers every fortnight.

Rideshare giant DiDi has introduced a 5c per kilometre increase which will go directly to drivers. Uber said it was overhauling its fee structure so it could pay its drivers more, amounting to an average earnings increase of six per cent nationwide.

On Monday, Workplace Relations Minister Amanda Rishworth announced the Fair Work Act will be changed to fast‑track applications by unions and transport operators seeking ’emergency’ supply‑chain orders from the FWC, allowing rates to be lifted in line with soaring fuel costs linked to the conflict in the Middle East. 

The amendments will scrap the current six‑month waiting period, enabling the tribunal to issue orders compelling transport clients to offer fair contract terms.