A United Nations food prices indicator showed food prices hit a six-year high in January after rising for eight consecutive months. Countries around the world are experiencing the price hikes, especially in emerging markets according to a reuters.com news report. “The shopping cart is getting much smaller and we’re paying much more,” said a 41-year old woman who works as a maid in Brazil’s capital Brasilia. “We’ve had to give up on little trips, visiting family at the weekend, and we haven’t been able to save any money for emergencies or to have in the bank.” said the woman.
Last year food inflation rose 14 percent among South America’s largest economy.. It was the biggest increase in nearly twenty years. Other developing countries recorded double-digit jumps in food inflation. The coronavirus (COVID-19) pandemic, rising staple goods and commodity prices, along with currency depreciation have been blamed for the spike in food prices.
According to the UN’s Food & Agriculture organization the hike in staple good costs and the effects of the COVID-19 crisis adds to concerns about global food prices. Wheat and cornmodity exporter countries such as Russia or Argentina started preserving domestic stockpiles which caused even more price inflation. Russian wheat farmers plan to limit grain exports in response to food inflation. Driven by higher prices and fears that recent dry weather could curtail wheat planting and effect yields, the 2021 wheat crop planting and sowing in major producing countries is expected to increase.
Central banks will have to decide whether to intervene to regulate rising food inflation according to Manik Narain, head of emerging market strategy. Central banks may be tempted to let inflation contiinue to rise. The new Central Bank governor Naci Agbal has implemented a new department dedicated to monitoring food and agricultural prices. The new department will serve as the Central Bank”s “early warning” system.