11-06-21 11:11:00, Global Food Prices Post Biggest Jump In Decade
Above Photo: Agence France-Presse.
40% surge in May heightens fears that inflation stoked by pandemic is speeding up.
London – Global food prices have surged by the biggest margin in a decade, as one closely watched index jumped 40 per cent last month, heightening fears that the inflation initially stoked by pandemic disruption was accelerating.
The year-on-year rise in the United Nations Food and Agriculture Organisation’s (FAO) monthly index was the largest jump since 2011, as commodity prices surged.
The higher inflation will hit poorer countries reliant on imports for staple goods. For richer countries, the cost of raw ingredients accounts for only part of the overall price paid for products at supermarkets and restaurants. But the rise in raw material prices has been so steep that big firms like Nestle and Coca-Cola have said they would pass on any increases.
Analysts also warned that the return of eating out as lockdowns lifted around the world would add to price pressures. “The decline in eating out was not totally compensated with eating at home, but as people start to go to restaurants again, you will see food prices rise,” said FAO senior economist Abdolreza Abbassian.
The cost of labour, transport and shipping is expected to push prices higher in the coming months.
“(With) the rise in the transport cost base with oil price increases and shipping bottlenecks, there is a lot of upward price pressure in the system,” said Ms Caroline Bain at Capital Economics.
In the United States, consumer goods firms were likely to face a 6.1 per cent rise in input costs this year compared with 0.7 per cent last year, according to analysts at Bernstein. Leading meat company Tyson Foods said raw material prices were more than 15 per cent higher, as well as cost increases in logistics, packaging and labour.
Mr Bruno Monteyne, analyst at Bernstein, said the bout of inflation would increase polarisation in consumer markets between premium products aimed at wealthier consumers – many of whom have additional cash to spare after being stuck at home during the pandemic – and cheaper brands catering to more stretched buyers.
“If you are already buying organic, fair trade ready-to-eat mangoes,