For Bloomberg analyst Javier Blas, staple foods like fish, legumes, meat and vegetables are becoming cheaper. This is a sign that global inflation has peaked.
“For central bankers battling the biggest hikes in prices in 40 years, falling food prices should provide some breathing room to slow rate hikes. For monetary authorities and households in emerging markets like India and Brazil, where food accounts for a much larger portion of daily spending, the fall in agricultural prices is even greater.
It will take time for lower wholesale prices for soft commodities to filter through to supermarkets. And their high energy and transportation costs will still offset some of the declines. Because of the farm-to-table lag, American families will continue to pay dearly for their Thanksgiving turkey this month. (and we our Christmas turkey).
Still, food inflation is reversing. Take the monthly food cost index compiled by the Food and Agriculture Organization of the United Nations. It has been rising steadily for the past two years, posting annual gains of up to 40% through mid-2021 and 20% to 30% in early-mid-2022. Since then, however, the index has fallen significantly, trimming its annual gains to just 1.9% in October. Based on current trends, the FAO Index is expected to record its first annual decline in more than two years in November.
COLUMN: What food crisis?
The FAO Food Coat Index turns negative on an annual percentage basis for the first time since mid-2020. And the prices of many foods, from chickpeas to salmon to palm oil, are already falling.
my newest @Opinion Note is here: https://t.co/CrtwYHYqu7 pic.twitter.com/jGzi4yaYkX
— Javier Blas (@JavierBlas) November 16, 2022
food deflation
After two years of strong annual price increases, the FAO Food Price Index is about to make its first year-on-year percentage decline.
Deflation is already visible across a wide range of food categories, including fish, legumes and some meats and vegetables. The price of lamb, for example, has fallen 25% since January. Salmon prices are down 40% from their last peak. Poultry prices have fallen by more than 25% since the beginning of the year. And since a recent spike just months ago, chickpeas, a staple food for a billion people in South Asia, have fallen 20%, while tomato prices in Europe have fallen 40% and palm oil in Asia nearly 50%.
As significant as these price declines are, it should be noted that rice — a key agricultural commodity — has remained resilient despite gloomy forecasts of shortages. In many ways, rice alone averted a real food crisis this year.”
That is good news.
Great news.
Facts are beating the catastrophic forecast of a food crisis 6-12 months after the outbreak of war in Ukraine, and we can only welcome the turn events are taking in agricultural commodity prices.
We were lucky too…
“As always in the natural resource industry, high prices are the best cure for high prices – farmers and ranchers have responded by increasing production. The weather also helped, with better harvests than many observers predicted earlier this year. For example, Australia, the world’s second largest wheat exporter after Russia, will harvest its second consecutive bumper crop in 2022-2023. Canada and Brazil are also expecting good harvests.”
That climate change is having more nuanced effects on global production than the howling of climate hysterics would have us believe.
The reality is that despite the war in Ukraine, despite the fact that there would be too many of us, and despite climate change that will leave us all dying in terrible suffering, we succeeded, not we but them farmers of the world to feed the whole planet.
It may be a detail to you, but it means a lot to billions of bellies.
Karl SANNAT
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