Global food inflation heats up

Food bills could become even more expensive after a gauge of global prices climbed to a fresh decade high last month.

A United Nations index of food costs rose 1.2 per cent in September, and are up by a third over the past year, data showed Thursday.

Prices for almost all types of foodstuffs gained, with key staples like vegetable oils in short supply, while wheat harvests have been hit by bad weather as demand remains strong.

Rising freight costs and worker shortages along the supply chain are compounding the problem, leaving some supermarket shelves short of items.

While it’ll take time for the latest leg-up to filter through to grocery stores, consumers around the world have already been hit by higher prices, adding to inflationary pressures and prompting governments to look for solutions to keep costs in check.

The world is already contending with its worst hunger crisis in at least 15 years, and higher food prices are particularly bad news for poorer nations that are dependent on imports, and can increase the risk of political instability.

There’s a risk things could get worse for the food sector. The recent surge in energy costs is sending prices for agricultural inputs like fertilizer soaring — threatening higher crop prices or possibly smaller supplies down the line — and spurring greenhouses growing vegetables to go dark.

Benchmark wheat futures are near an eight-year high in Chicago after bad weather in key shippers. North American and Russian farms were hit by drought, while the European Union had too much rain during harvest, curbing grain quality and leaving less supply suitable for bread-baking.

Moscow has also taxed crop exports to safeguard domestic supply and cool food inflation.

That’s boosted bills across major buyers. In top wheat importer Egypt, the average cost in tenders has surged by almost US$100 a ton since purchases for the current season began, and the president has called for an increase in subsidized bread prices.

Other nations have issued a raft of wheat import tenders lately, too.

“Among major cereals, wheat will be the focus in the coming weeks as demand need to be tested against fast rising prices,” Abdolreza Abbassian, a senior economist at the UN’S Food and Agriculture Organization, said in a report.

Here is the breakdown of food price changes in September:

Grains rose two per cent, driven by wheat, with rice also gaining.

Vegetable oils climbed 1.7 per cent on strong demand for palm oil and concerns about worker shortages in Malaysia.

Dairy and sugar increased, while meat was steady.