Food prices close to record; fear of inflation grows

Food prices rose to approach an all-time high, fueling concerns from consumers and governments around the world about inflation.

A United Nations gauge of world food prices rose 1.2% last month, threatening to make it more expensive to bring food to family tables. This adds to the evidence that inflation is skyrocketing in the world’s largest economies and could make it even more difficult for poorer nations to import food, exacerbating a hunger crisis.

Prices have skyrocketed for a number of reasons. Poor weather conditions that have affected crops, higher shipping rates, a shortage of workers and an energy crisis have affected supply chains, while fertilizer costs have also risen.

While it typically takes time for commodity costs to reach supermarkets, the increases are evoking memories of spikes in 2008 and 2011 that contributed to global food crises.

“This is obviously bad news for consumers.”Said Abdolreza Abbassian, senior economist at the Food and Agriculture Organization of the United Nations (FAO).

November’s rise was mainly driven by cereals and dairy, while vegetable oil and meat prices fell, the FAO said in a report on Thursday.

Higher food prices are putting pressure on the budgets of consumers who have already been hit by the COVID-19 crisis and high energy costs. Buyers are likely to feel the effects of inflation for several more months as economies reopen after the pandemic.

That is creating a political dilemma for central banks about how quickly the stimulus measures should be withdrawn. This week, the president of the Federal Reserve of the United States, Jerome Powell, said that in its next meeting it should be discussed whether to finalize the bond purchases a few months before, and withdrew the word “transitory”To describe high inflation.

While food prices are unlikely to decline in the short term, tighter monetary policy and concerns about the spread of the omicron variant of the coronavirus will likely slow the rises, as “the market expects a slowdown in demand”Abbassian said.

However, the long-term outlook remains uncertain as high fertilizer costs and the possibility of bad weather conditions affecting crops could restrict food supplies, he said.

Food bill

Last month, FAO indicated that this year the global food import bill should rise even more than expected to a record high due to high costs of basic food and transport.

Of particular concern is that import costs in poor countries are rising faster than in developed economies, something that is becoming a growing problem in regions that depend on imports for supplies.

Authorities in regions such as North Africa – one of the world’s leading grain importers – and Turkey are already facing difficulties in protecting the population from higher food costs.