Food inflation and global recession are the most pressing issues nowadays. Food inflation is a problem that affects all states, countries, and people; in fact, it is becoming a worldwide issue. In many countries around the world, the majority of the people are no longer able to afford two basic meals every day. In this article, we will discuss what is food inflation and how it is affecting us?
Food inflation is defined as a rise in the price of essential food goods that is greater than the Consumer Price Index. Simply put, it occurs when food prices rise over a level that an ordinary consumer can pay. Continue reading this post to gain a better understanding of the major causes of present food inflation.
DISEQUILIBRIUM IN DEMAND AND SUPPLY AND GLOBAL FOOD INFLATION
Let’s go back to the year 2020. Covid-19 arrived as a global pandemic, shaking the world to its foundations. The world was plunged into darkness, and no country was spared. According to statistics, between May 2020 and February 2022, the FAO Food Price Index increased by 55.2 percent. As soon as the economies began to recover, there was a discrepancy between supply and demand, which led to price increases. Covid-19 had a significant impact on the production. As soon as economies began to recover, the current supply was insufficient to meet the current demand. As a result, the prices of these items climbed, according to simple economics.
FACTORS THAT ARE INDIRECT
There are a number of factors that have contributed to global food inflation in an indirect manner. The increase in freight expenses as a result of Covid is one of them. Transportation costs influenced the price of imports, and so contributed significantly to food inflation. Furthermore, Covid imposed import/export restrictions, contributing to food inflation. Fertilizer costs have risen in tandem with those of oil and gas during the last few months. As a result, production costs have increased, contributing to food inflation.
UKRAINE VS RUSSIA
UKRAINE VS RUSSIA conflict has worsened the dilemma of rising food prices. Both of these countries are major agricultural producers and exporters of food products. The conflict between these two countries has had an impact not just on their agriculture, but also on the world’s reliance on their output. This war has produced a significant imbalance between supply and demand, which could cause food inflation to increase much further.
WHERE DO WE GO FROM HERE?
The effects of food inflation have already begun to manifest. Many countries around the world are hurting, and my own is about to suffer. Governments may be able to avoid this predicament by offering relief. However, since the pandemic has already sapped the economy’s vitality, most governments may not see subsidies as a viable option.
Well, this is about what food inflation is and how food inflation is affecting the world. I hope you have learned something from this article. For more articles, visit our website.
