Global Food Prices Hit Fresh Decade High
Global food prices are outrageously high, and things don’t look to be changing anytime soon. Early Thursday, Rome-based Food and Agriculture Organization (FAO) released monthly data on the state of food prices that showed global food prices rose for a second consecutive month in September to reach a new decade high, driven by gains for cereals and vegetable oils.
The FAO Food Price Index (FFPI), a measure of the monthly change in international prices of a basket of food commodities (including cereals, vegetable oils, dairy, meat, and sugar), rose 1.2% in September to 130 points and 32.8% higher than in September 2020. ed
The latest rise in the FFPI was primarily driven by “higher prices of most cereals and vegetable oils. Dairy and sugar prices were also firmer, while the meat price sub-index remained stable,” FAO said.
Compound soaring freight costs on land and sea, along with supply chain disruptions, have left some grocery chains with no other choice but to raise prices and or to leave shelves bare as food shortages persist. An executive of Kroger, one of the largest US supermarket chains, warned last month that grocery prices are set to move even higher as inflation sets in.
Inflationary pressures prompted the White House to calm discontent among working-poor families who allocate a high percentage of their incomes to basic and essential items. The Biden administration acknowledged inflation as a real concern last month (only nine months late). The administration has raised food stamps by 25%.
Besides rising demand (some of which has been artificially produced by massive amounts of fiscal and monetary stimulus), bad weather, and supply chain disruptions, there could be another emerging issue that may pressure food prices even higher, that is, the soaring cost of energy is sending fertilizer, a byproduct of natural gas (natgas prices in some areas around the world are at record highs), higher which would mean crop prices will have to rise. There are also issues of greenhouses growing vegetables going dark in Europe because energy and power prices are too high.
The Federal Reserve’s credibility, or whatever was left of it, continues to wane as the “transitory” inflation narrative falters.