Soaring Cost of Food Is Forcing Families to Scrimp at the Dinner Table
August 20, 2021
(BB) Whether at supermarkets, corner stores, or open-air markets, prices for food have been surging in much of the world, forcing families to make tough decisions about their diets. Meat is often the first to go, ceding space to less expensive proteins such as dairy, eggs, or beans. In some households, a glass of milk has become a luxury reserved only for children; fresh fruit, once deemed a necessity, is now a treat.
Food prices in July were up 31% from the same month last year, according to an index compiled by the United Nations’ Food and Agriculture Organization. A portion of the rise is transitory, fueled by supply chain disruption and extreme weather. Although some of the bottlenecks caused by the pandemic show signs of abating, structural factors such as climate change and China’s strong appetite for imports will likely endure.
Central banks often disregard food and fuel inflation when setting policy because they’re the most volatile categories in the typical basket of consumer goods and services. “However, when ordinary people think about inflation, they don’t want to exclude food and fuels,” says Shang-Jin Wei, a professor of finance and economics at Columbia Business School. Given the rise in inflation that average consumers are experiencing, “I’m predicting we are underestimating the chance that central banks will take more drastic measures than central banks themselves are predicting.”
The sustained increase in prices for basic staples is making some governments nervous. Russia, one of the world’s top grain exporters, began taxing wheat exports in February to stem rising prices at home, while Argentina in May temporarily banned beef sales abroad for the same reason. The surge has stirred memories of 2008 and 2011, respectively, when spikes triggered food riots in more than 30 nations across Africa, Asia, and the Middle East and contributed to political uprisings in the Arab Spring. “Food fundamentally touches all of us,” says Cullen Hendrix, nonresident senior fellow at the Peterson Institute for International Economics, a Washington-based think tank. “Everybody knows about the price of food and knows when it’s increasing, regardless of whether or not they have any interest in politics.” But for most households, relief is scant.
Story by Tope Alake, Fabiana Batista, Pratik Parija, and Leslie Patton for Bloomberg Business
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