As the big dry continues to wreak havoc across the state the cost of staples such as bread and some meats is expected to rise by at least 10 per cent by the end of this year.
Almost 72 per cent of New South Wales has now been drought declared with wheat crops in southern districts worst affected.
Primary Industries Minister Ian Macdonald said grain farmers are bracing themselves for crop failure if decent rains don't fall in the next week.
Earlier
Drought conditions have worsened in NSW, with more than 70 per cent of the state now officially drought-declared.
Figures released by the NSW Department of Primary Industries on Saturday show just 10.8 per cent of the state, mostly on the eastern coastline, has enjoyed normal rainfall, and was rated as "satisfactory" in September.
Another isolated region in the west around Bourke haS also escaped the drought.
A further 17.6 per cent of the state is rated as marginal - in the Hunter and around Tamworth plus regions including Wilcannia and Walgett - while the remaining 71.6 per cent of the state is now officially in drought.
Primary Industries Minister Ian Macdonald said the drought figure had increased from 66.2 per cent of the state in the previous month.
"All in all, the situation has worsened, this is not a good scenario facing our rural economy going into the spring period," said Mr Macdonald..
"Of course it will have the natural consequences of putting pressure on food prices across our supermarkets, green grocers and other outlets in NSW."
Mr Macdonald said conditions were their most dire in the state's south, where some farmers would face total crop failure without significant rainfall within a week.
Despite the worsening conditions, he also said NSW agriculture was in a better shape now than a year ago.
"Certainly conditions in NSW are better than they were in the latter part of last year, we had significant summer rain meaning farm dams have been replenished," he said.
"However, in the south of the state we've had a consistent pattern of no rainfall, or little rainfall over the last year, and that's where the conditions are at their worst."