Food costs around the world soared even closer to a record-high last month, creating a headache for both consumers and governments as surging inflation becomes increasingly more permanent.
According to the United Nation’s latest FAO report, global food prices accelerated 1.2% in November, forcing households to allocate a greater proportion of their income towards groceries, and further catapulting the worsening hunger crisis across developing countries. The majority of the price gains were concentrated across staple food items such as grains and dairy, while meat and vegetable oil prices declined.
Various factors have been pushing global food prices substantially higher as of late, including adverse climate conditions, supply chain disruptions, labour shortages, and surging energy costs. To make matters worse, fertilizer prices have also increased as of late, threatening to further raise input costs for producers ahead of the growing season in the northern hemisphere.
Last month, the FAO cautioned that import costs for foods will likely rise to record-high levels before the end of the year, due to increases in global logistics and shipping costs. The issue is particularly alarming for developing economies, which predominantly rely on imports for their food supply.
With food inflation rapidly accelerating long past the transitory phase, governments and central banks have been under increased scrutiny to dial back Covid-19 related fiscal and monetary policies, particularly in the US and Europe. Earlier this week, Fed Chair Jerome Powell finally acknowledged it’s time to retire the word transitory when talking about inflation, announcing that the central bank may even dial back its bond purchases several months in advance of previous forecasts.
Information for this briefing was found via the FAO. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
