A Feat to Eat – Inflation’s Persisting Effects on Food Prices
For the past several decades, advancements in agriculture, supply chain efficiency, and globalization have greatly benefited the low costs and high production of food across the world. Now, the once thought-to-be stable and diminishing prices of food have shown exactly how they were not as indestructible as everyone deemed them to be. With high inflation, the effects of the pandemic, and political tensions abroad, prices for food have been exceptionally higher than they were just three years ago. Compared to early 2020, the price of food globally has increased an astonishing 25%, mostly due to high prices for energy and inefficiencies in supply chains following the Covid-19 pandemic.
As the world has shifted to mass globalization and increased foreign trade, the food supply has increasingly become reliant on international exports. A relatively recent statistic provided by the U.N. Food and Agricultural Organization showed in 2019, countries were 50% more likely to form a direct food-related trade link with another country compared to times in 1995. This was because transportation costs were low, and businesses understood consumers valued a variety of food options that may have not been able to be found locally. Now, with increasing transportation and energy costs due to the war in Ukraine, several grocers and vendors may have to begin considering finding domestic options to satisfy customers. Nevertheless, the average household may consider to budget, as U.S. food price inflation is still expected to rise next another 3% to 4% next year, according to the Agricultural Department.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
