Global food prices are skyrocketing with international prices for major food items reaching prices only previously seen during global food price crises.
There are growing concerns that another global food crisis may be on the way and that as that takes hold, people will be able to afford less, putting additional pressure on disposable income and consumer spending power (source: Doddler). Moreover, with global food prices rising, the poorest countries in the world are likely to experience the effects of the squeeze more profoundly.
The effects of the pandemic
The pandemic impacted global food prices for a number of reasons. Due to national and global lockdowns, there were periods of low production, worsened by ongoing staff shortages.
Additionally, current prices are restabilising after dropping for a time during the pandemic. The economy is rebalancing but as a consequence, prices are increasing for global food items.
An all-time high for food prices
The UN food and agriculture organisation (FAO) published their monthly food index on April 8th, revealing that global food prices reached an all time high in March 2022. In fact, food commodities reportedly cost a third more than they did at the same time last year.
Even month-on-month, there was a 12.6% increase in the Food Price Index – the highest levels since the index was created in 1990. The index, which tracks changes in the price of a common basket of food commodities, showed that prices were a staggering 33.6 higher than the previous year.
Effects of inflation
Inflation rates are currently at record highs meaning that the cost of goods and services has increased exponentially. The Office for National Statistics reported that 81% of UK adults have experienced an increase to their cost of living with the most common increases in price found for the price of food (92%).
As a result of inflation, interest rates around the world will likely rise and thus, people with secured loans in the UK and around the world
The impact of Russia’s war on Ukraine
The war on Ukraine has a large part to play in the disruption of the global food market with Black Sea exports being heavily impacted. One area that has been especially affected has been the production of wheat, with a quarter of the world’s wheat exports coming from regions in Russia and Ukraine. As a result, this decreased supply has meant a surge of 19.7% in wheat prices in March, as well as for wheat alternatives such as maize, barley and sorghum. Subsequently, global cereal prices went up by 17% in the space of a month.
Where are the effects being seen?
The greatest effects are being seen in countries and households where the highest proportion of disposable income is spent on food costs. This extreme surge in consumer food prices has been especially tough for low-income countries and low-income households in more affluent countries.
As a result of these price hikes, many are struggling to afford their basic food expenses. Subsequently, they are skipping meals, opting for less nutritious options or finding other ways to cope with the rising prices. This has detrimental effects on their long-term health and nutrition and could impact future global health.
What will happen to global food prices?
It is predicted that prices will continue to increase as long as the war rages on. Not only that, but inflation rates continue to remain high which has brought up the price of food substantially. The U.S. Department of Agriculture revealed in their most recent Food Price Outlook that the cost of food could increase from anywhere between 2.5% and 3.5% during 2022.