Ahead of handing down his first federal budget on October 25, Chalmers said modeling suggests floods in Tasmania, New South Wales and Victoria will wipe 0.25 per cent off gross domestic product (GDP) growth in the final quarter of 2022, reports Xinhua news agency.

Thousands of homes and businesses have been affected by the floods, with more rain expected over the weekend.

The Treasury forecasts the floods will drive the price of fruit and vegetables up by 8 per cent over the next six months.

However, inflation is still expected to peak at 7.75 per cent.

Chalmers said the big ongoing contributor to inflation increasingly will be the impact of these natural disasters and the impact of higher electricity prices.

The ruling Labor government said its first budget since winning May’s election will have a focus on addressing the rising cost of living.

It will include about A$1.5 billion ($877 million) in previously announced emergency payments for flood victims and a A$3 billion reserve fund to respond to future disasters.

“We don’t know yet whether that A$3 billion will be sufficient but we consider it prudent,” Chalmers said in a press conference in Canberra on Friday.

“This is just an initial estimate. The costs could be even more significant, but responding to natural disasters and building resilience in our economy will be absolutely central features of the budget that I hand out next Tuesday (October 25) night.”

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