Source: https://www.msn.com/en-us/money/mark...ou/ar-BB1fZDaC
The Grocery Price Shock Is Coming to a Store Near You
Megan Durisin and Deirdre Hipwell 1 day ago
(Bloomberg) -- Corn, wheat, soybeans, vegetable oils: A small handful of commodities form the backbone of much of the world?s diet and they?re dramatically more expensive, flashing alarm signals for global shopping budgets.
This week, the Bloomberg Agriculture Spot Index ? which tracks key farm products ? surged the most in almost nine years, driven by a rally in crop futures. With global food prices already at the highest since mid-2014, this latest jump is being closely watched because staple crops are a ubiquitous influence on grocery shelves ? from bread and pizza dough to meat and even soda.
Soaring raw material prices have broad repercussions for households and businesses, and threaten a world economy trying to recover from the damage of the coronavirus pandemic. They help fuel food inflation, bringing more pain for families that are already grappling with financial pressure from the loss of jobs or incomes. For central banks, a spike in prices at a time of weak growth creates an unwelcome policy choice and could limit their ability to loosen policy.
?There seems to be sort of a bullish force behind the prices internationally,? Abdolreza Abbassian, senior economist at the United Nations? Food and Agriculture Organization, said in an interview. ?The indications are that there is very little reason to believe prices would remain at these levels. It?s more likely they will rise further. Hardship is still ahead.?
Emerging markets, in some cases already under pressure from weaker currencies, are particularly vulnerable because food costs make up a larger share of their spending. For the poorest and often politically unstable countries, the surge in raw materials threatens to further stoke global hunger.
?The relentless rise in prices acts as a misery multiplier, driving millions deeper into hunger and desperation,? Chris Nikoi, the World Food Programme?s regional director for West Africa, said earlier this month. It?s ?pushing a basic meal beyond the reach of millions of poor families who were already struggling to get by.?
The most recent crop spikes follow months of price gains fueled by booming import demand from China. Corn prices have doubled in the past year, while soybeans are up about 80% and wheat 30%. With China?s purchases continuing and a spate of adverse weather conditions threatening crops in Brazil and the U.S., there are few signs of respite. Analysts including those at Rabobank, Mintec and HSBC Global Research all see a risk of even higher prices as a result, though it will vary across markets.
The impact on grocery shelves can already be seen in surging tortilla prices in Mexico, beef in Brazil and retail palm oil in Myanmar. In the U.S., it?s more expensive bacon and other meat cuts.
?Generally people see this inflation continuing,? said Tosin Jack, an analyst at Mintec, which monitors commodity prices. ?The trend will continue for some time and it will translate into consumer goods.?...
The Grocery Price Shock Is Coming to a Store Near You
Megan Durisin and Deirdre Hipwell 1 day ago
(Bloomberg) -- Corn, wheat, soybeans, vegetable oils: A small handful of commodities form the backbone of much of the world?s diet and they?re dramatically more expensive, flashing alarm signals for global shopping budgets.
This week, the Bloomberg Agriculture Spot Index ? which tracks key farm products ? surged the most in almost nine years, driven by a rally in crop futures. With global food prices already at the highest since mid-2014, this latest jump is being closely watched because staple crops are a ubiquitous influence on grocery shelves ? from bread and pizza dough to meat and even soda.
Soaring raw material prices have broad repercussions for households and businesses, and threaten a world economy trying to recover from the damage of the coronavirus pandemic. They help fuel food inflation, bringing more pain for families that are already grappling with financial pressure from the loss of jobs or incomes. For central banks, a spike in prices at a time of weak growth creates an unwelcome policy choice and could limit their ability to loosen policy.
?There seems to be sort of a bullish force behind the prices internationally,? Abdolreza Abbassian, senior economist at the United Nations? Food and Agriculture Organization, said in an interview. ?The indications are that there is very little reason to believe prices would remain at these levels. It?s more likely they will rise further. Hardship is still ahead.?
Emerging markets, in some cases already under pressure from weaker currencies, are particularly vulnerable because food costs make up a larger share of their spending. For the poorest and often politically unstable countries, the surge in raw materials threatens to further stoke global hunger.
?The relentless rise in prices acts as a misery multiplier, driving millions deeper into hunger and desperation,? Chris Nikoi, the World Food Programme?s regional director for West Africa, said earlier this month. It?s ?pushing a basic meal beyond the reach of millions of poor families who were already struggling to get by.?
The most recent crop spikes follow months of price gains fueled by booming import demand from China. Corn prices have doubled in the past year, while soybeans are up about 80% and wheat 30%. With China?s purchases continuing and a spate of adverse weather conditions threatening crops in Brazil and the U.S., there are few signs of respite. Analysts including those at Rabobank, Mintec and HSBC Global Research all see a risk of even higher prices as a result, though it will vary across markets.
The impact on grocery shelves can already be seen in surging tortilla prices in Mexico, beef in Brazil and retail palm oil in Myanmar. In the U.S., it?s more expensive bacon and other meat cuts.
?Generally people see this inflation continuing,? said Tosin Jack, an analyst at Mintec, which monitors commodity prices. ?The trend will continue for some time and it will translate into consumer goods.?...
Comment