Longest Surge in Food Prices Since ‘08 Hits Poorest Nations Most
(Bloomberg) -- The surge in food prices that’s eating into consumer budgets and hitting some of the poorest nations shows few signs of abating.
A United Nations gauge of global costs rose for a ninth straight month in February, the longest run since 2008, when the world faced the first of two food crises within several years. Prices of everything from sugar to vegetable oils rose last month, sending the overall measure to a fresh six-year high.
Food prices have jumped as China buys huge amounts of crops, adverse weather threatens harvests and supplies of products like dairy tighten. Costlier staples are trickling through to supermarket shelves, with emerging markets particularly exposed. As well as exacerbating food inequalities in nations hard hit by the Covid-19 pandemic, bigger grocery bills risk accelerating inflation, making it harder for central banks to provide more stimulus.
“This pressure is very much a concern,” said Shirley Mustafa, an economist at the UN’s Rome-based Food and Agriculture Organization. “Higher international prices could really go to exacerbate the economic hardship caused by the pandemic, especially for some vulnerable groups.”
Low-income, import-dependent countries could be among the most affected. Their grain-import needs are forecast to be above average in the 2020-21 season, the FAO said in a report. It also estimated some 45 countries are in need of external assistance for food.
“We see a number of countries on the one hand seeing greater production, but also with heightened import needs,” Mustafa said. “Put this next to the increases in international food prices, this is at the root of the concern we have over the recent gains.”
Global food prices are still well below a 2011 peak and there are signs that increases in grains prices are slowing, with grains costs rising 1.2% last month, the least since July. Supply issues are poised to ease as wheat output is forecast to reach a record 780 million tons next season, while corn production in Latin America is seen above average, the FAO said.
Food-price gains are also often felt unevenly across the globe as many countries have “driven a wedge” between international and local prices through subsidies or trade taxes, Commerzbank AG analyst Michaela Helbing-Kuhl said in a note.
©2021 Bloomberg L.P.