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article imageFood prices in U.S. soaring as global commodity prices surge

By Karen Graham     Mar 1, 2021 in World
Global food prices are at the highest in more than six years, driven by a jump in the cost of everything from soybeans to palm oil, sugar, and wheat. And in the U.S., consumers on average paid 3.7 percent more for food in January than one year ago.
Western countries are getting off easily because it might be a matter of just switching brands while shopping. However, in developing nations and poorer countries, it can mean the difference between sending a child to school or out to earn money.
Some banks are already warning the world could be heading into what is called a commodities “supercycle" - an extended period during which demand drives prices well above their long-run trend. We are not talking about the price of petroleum or steel, but the basic necessities of life - food.
Inflation is putting another squeeze on consumers hurting from the pandemic-induced recession and—in some places—falling currencies.
The global pandemic has had some unforeseen consequences, and possibly the biggest has been the rise in food insecurity around the world, including in the United States, one of the world's richer nations. In India, farmers have revolted against efforts to bring prices down.
Displaced Yemenis receive humanitarian aid provided by the World Food Programme (WFP) in the norther...
Displaced Yemenis receive humanitarian aid provided by the World Food Programme (WFP) in the northern province of Hajjah
ESSA AHMED, AFP
And in Russia and Argentina, they are restricting crop shipments to suppress prices at home. Bloomberg is reporting that the United Arab Emirates is considering possible price caps on some foods.
“These price spikes are destabilizing, not just because they induce a lot of hardship on communities and households, but also because there is this expectation that the government will do something about it,” said Cullen Hendrix, a non-resident senior fellow at the Peterson Institute for International Economics, a Washington-based think tank.
Food shortages in the U.S.
Interestingly, in the U.S., Federal Reserve policymakers have downplayed any imminent inflation risk. However, Kraft Heinz chief executive Miguel Patricio spoke with Reuters recently. He said, “We have inflation, we are seeing inflation, we are concerned about inflation. We have to mitigate that inflation, or at least part of it, with hedges and with efficiencies in the factories. Will we have price increases in food this year? Maybe in some categories that are very exposed to specific commodities.”
(L-R) Texas congresswoman Penny Morales Shaw  US congresswomen Sheila Jackson Lee  Alexandria Ocasio...
(L-R) Texas congresswoman Penny Morales Shaw, US congresswomen Sheila Jackson Lee, Alexandria Ocasio-Cortez and Sylvia Garcia help distribute food at the Houston Food Bank on February 20, 2021
Elizabeth Conley, POOL/AFP
“Where we are seeing (inflation) is in grains and everything related to grains... It’s across the board. Sugar has big inflation; mac and cheese because it has wheat; mayo because it has oil; salad dressing because it has oil; all sweet products like desserts, ” Patricio said.
Other major food companies, including Lipton tea and Hellmann’s mayonnaise maker Unilever, have also signaled higher prices due to global commodity inflation.
Food inflation is at almost twice the Federal Reserve’s inflation target, says Sal Gilbertie, president and chief investment officer at Teucrium Trading. Meats and grains, and grain products such as bread, show “much higher overall rates of inflation,” he says, according to Barron's.
More about Food security, food prices soar, Pandemic, supply chains, adverse weather
 
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