Food price rises are coming, warns Stevens

Inflation will likely hit three per cent by the middle of the year in the wake of food price rises caused by the recent natural disasters in Queensland, Reserve Bank (RBA) governor Glenn Stevens has warned.

Speaking at a parliamentary economics committee, Mr Stevens said the central bank had revised its inflation forecasts after Cyclone Yasi and the recent flooding, with associated price rises for items like food expected to add at least half a percentage point to inflation.

Commenting on the statement, the Daily Telegraph suggested that the effects of higher food prices would be felt right across the country.

"Economists say Australians fortunate enough to be out of the path of the cyclone will still feel its effects – at the supermarket and beyond," it added.

Consumers aiming to boost their spending power at present could choose to compare debit cards and other money products in search of the best options. Mr Stevens said the inflationary trend would begin to reverse again by the second half of the year and that interest rate rises may not be needed to combat the rise because the effects would be temporary.

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