Joseph
by Tyler Durden
Central banks and the mainstream media continue to promote the idea that high food inflation is temporary and the average Joe and Jane shouldn’t worry about it. But in a new report on its website in Rome Food and Agriculture Organization (FAO), Global food prices are on the rise, once again, and are returning to their highest levels in the recent decade.
The Food and Agriculture Organization released a detailed statement on Thursday, after two consecutive months of declines, global food prices jumped in August due to strong gains in sugar, vegetable oils and cereals.
The FAO Food Price Index, which tracks international prices of globally traded food commodities, averaged 127.4 points in August, up 3.9 points (3.1%) from July and 31.5 points (32.9%) over the same period last year.
In August, the most important driver of food prices was the FAO Sugar Price Index, which jumped 9.6% from July due to frost damage to crops in Brazil, the world’s largest exporter of sugar. Readers may remember in “Frost Bites, the Brazilian sugar crop with high pricesWe have noticed that several climatic disasters in Brazil have severely damaged the sugar crop.
The second biggest jump in the basket was the FAO Vegetable Oil Price Index, which rose by 6.7% last month, as global palm oil prices soared to record highs due to potential production declines.
The FAO Cereal Price Index rose 3.4% in August compared to July. The meat index rose slightly in August, and the dairy index declined.
A combination of global droughts, volatile weather, labor shortages and ongoing supply chain disruptions due to the coronavirus, among others, have contributed to the rapid rise in food prices over the past year.
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And as we head down, food inflation is showing no signs of abating and could worsen. This could cause social and economic turmoil in emerging market economies, mainly because people in those countries allocate more of their daily budgets to food.
Albert Edwards of Societe Generale initially warned of soaring food inflation last December before the surge in food prices in a note titled “Why Albert Edwards is starting to panic about rising food prices.” He said the food price inflation was driven by the very loose monetary policy of the World Central Bank and he warns against uprisings in underdeveloped countries.
In first world countries such as the United States and Europe, rising food inflation has not yet become a major problem for consumers, but it may start to anger workers and the poor this fall when Supermarket prices are expected to jump.
Global food price inflation has been very low over the past few decades. Now food prices are on the rise, and this could be an indication once the Fed It starts decreasing so that bond yields will only go up.
Source: ZeroHedge
