Corn, wheat, soybeans, vegetable oils: A small handful of commodities form the backbone of much of the world’s diet and they’re dramatically more expensive, flashing alarm signals for global shopping budgets.
This week, the Bloomberg Agriculture Spot Index — which tracks key farm products — surged the most in almost nine years, driven by a rally in crop futures. With global food prices already at the highest since mid-2014, this latest jump is being closely watched because staple crops are a ubiquitous influence on grocery shelves — from bread and pizza dough to meat and even soda.
Soaring raw material prices have broad repercussions for households and businesses, and threaten a world economy trying to recover from the damage of the coronavirus pandemic. They help fuel food inflation, bringing more pain for families that are already grappling with financial pressure from the loss of jobs or incomes. For central banks, a spike in prices at a time of weak growth creates an unwelcome policy choice and could limit their ability to loosen policy.
“There seems to be sort of a bullish force behind the prices internationally,” Abdolreza Abbassian, senior economist at the United Nations’ Food and Agriculture Organization, said in an interview. “The indications are that there is very little reason to believe prices would remain at these levels. It’s more likely they will rise further. Hardship is still ahead.”
merging markets, in some cases already under pressure from weaker currencies, are particularly vulnerable because food costs make up a larger share of their spending. For the poorest and often politically unstable countries, the surge in raw materials threatens to further stoke global hunger.
“The relentless rise in prices acts as a misery multiplier, driving millions deeper into hunger and desperation,” Chris Nikoi, the World Food Programme’s regional director for West Africa, said earlier this month. It’s “pushing a basic meal beyond the reach of millions of poor families who were already struggling to get by.”