Why Are Food Prices Going Up So Rapidly?

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For a long time, experts have been warning that inflationary policies would lead to an aggressive jump in global food prices and now this is precisely what consumers are seeing at the grocery stores. Over the past twelve months, food prices rose dramatically. In fact, they faced the acutest increase in decades. But on the other hand, wages haven’t been increasing nearly as quickly as food prices, and this is pushing tens of millions of people into poverty, food insecurity, and hunger. Here, in the United States, the wealthiest country on the entire planet, approximately 24 million Americans don’t have enough to eat and rely on assistance to feed their families every month. Meanwhile, middle-class and low-income workers are now facing a severe case of sticker shock whenever they go to the stores and realize their food budget doesn’t stretch as much as it used to. The last time US consumers have seen prices escalate this high was during the Jimmy Carter era of the 1970s. Needless to say that the latest price hikes are making people increasingly angry.
Since the health crisis started, global food supplies have been dwindling, and the result of tight supplies and high demand is, of course, an absolutely shocking surge in global food prices. While politicians and policymakers try to convince the public that soaring food inflation is only “temporary” and there’s nothing to be worried about, a recent report released by UN’s Food and Agriculture Organization (FAO) revealed that global food prices are now growing at the fastest pace in nearly a decade. In August, world food prices jumped 32.9% compared to the same period last year due to solid gains in sugar, vegetable oils, and cereals. FAO’s food price index, which tracks international prices of globally traded food commodities, averaged 127.4 points in August, an increase of 3.9 points from July.
As if that wasn’t enough, food industry executives have been telling the media that there’s no end in sight for those price increases. In fact, recently, one analyst and food trends expert said that this trend will continue for at least the next several years. It seems like the world is going through some sort of “perfect storm” that could lead us to mass food shortages in the coming months and years. And while our leaders should be coming up with effective solutions to mitigate these problems, they have actually been saying that the “greed of the meat processing industry” is the one to blame. The thing is that price gouging is a serious offense, and if that’s really the case, it is also our leaders’ responsibility to deal with this situation, instead of only pointing fingers and letting the public suffer with painful price increases.
Experts of the food industry, however, argue that the increases are mostly related to a series of disruptions that include global droughts, extreme weather, factory fires, labor shortages, and supply chain bottlenecks. Food inflation has been largely supported by artificially fueled consumer demand, and given that there are no signs abating and it actually may worsen during this fall, this could severely aggravate socio-economic turmoil around the world because people will now have to allocate more of their daily budgets to food. Last year, SocGen’s Albert Edwards first warned about soaring food inflation. Back then, he said a driver of food inflation has been the global central bank’s ultra-loose monetary policy and warned about the potential for further social conflicts across several countries, including the US. At this point, many of those who were expecting things to be returning to ‘normal’ and prices to be starting to stabilize are getting bitterly disappointed, because the health crisis is dramatically worsening and so are our economic conditions.
After so many epic failures, it’s understandable why so many people can’t trust the government anymore. The way our leaders responded to this crisis has been a complete and total disaster. We’ve been living a nightmare for the past 18 months, and given the way things are going, it seems like this is just the beginning. Over the next few months, we are going to witness more panic, more chaos, more shortages, and more price increases. This means that although food prices are already ridiculously high, they are about to reach insane levels and most people remain unaware of it. Sadly, many Americans don’t even know how broken our system really is and they continue to believe that it will never fail. After all, this is America, the country of the great. But the truth is that it is failing, and what we have experienced so far is just a preview of what is coming next.


Epic Economist

Epic Economist

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