Food price inflation is proving stubbornly persistent

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There is perhaps no more important political variable throughout history than the price of food. No government, whether democratic or dictatorial, will be seen as legitimate by people who cannot afford to feed their families. So it’s bad news that just as energy prices are coming down from their extreme peaks last year, and households are beginning to feel that pinch loosening, food price inflation in much of the world continues. being stubbornly tall.

when uk inflation figures were released last week, the 12-month headline rate fell as predicted as last spring’s energy price spikes are behind us. The cost of food, however, continues to rise: Prices were 19 percent higher than a year ago, more than twice the rate of headline inflation, and show little sign of slowing.

When increasing numbers of people are forced to skip meals, it’s tempting to blame food vendors. But accusations of “greed” are misplaced, at least in UK food markets. If anything, UK supermarkets are notoriously good at price competition, as longstanding complaints from British farmers attest. Your recent profit margins are within its historical range.

It makes more sense to blame the trade barriers that went up when Britain left the EU and its single market. The food trade would always be particularly affected by a hard Brexit, given the tight regulatory controls and the higher additional cost of time for perishable consignments. Investigation from the London School of Economics suggests that almost a third of the rise in UK food prices since the end of 2019 can be attributed to new trade barriers.

However, the most recent food inflation is mostly a global story. Food prices spiked during Russia’s full-scale invasion of Ukraine last year, as did and partly because of energy prices, but also because of Russian theft and blockade of exports. Ukrainian food. From a European perspective, the UK is not an outlier: while eurozone food price inflation fell to 16 percent in April, it has largely matched that of Britain over the past year.

In the US, less internationally open than European economies, food price growth also jumped last year, but to a lower, earlier peak. US food price inflation has slowed since August, keeping pace with headline and energy prices, and fell to about 7 percent in April.

The same should eventually happen in Europe. Food and Agriculture Organization of the United Nations Food Price Index shows that world prices for food commodities peaked a year ago and have fallen by around a fifth since then. So far, this positive development has not benefited European consumers. That could be because the energy price shock was larger than elsewhere, adding more persistent costs to food production in Europe.

But governments can hardly be complacent. Until the prices at the supermarket checkouts come down, they have to make sure that the citizens with the lowest wages can afford enough and healthy food. Targeted direct support may well be necessary and is preferable to price controls in some countries. they’ve tried: In the UK, Rishi Sunak’s government plans to ask retailers to voluntarily cap prices. European governments must also monitor how well markets avoid price increases or shortages as prices adjust. With falling wholesale prices, some in the food supply chain may be tempted to pocket higher profit margins. Scrutiny, moral suasion, and political intervention should be considered.

Even in the best of times, where prices drop early, we shouldn’t expect this to be an exception. As climate change brings more extreme weather, swings in food prices will only intensify. Governments better prepare.