Your Cooking Oil Could Soon Cost More. Here's Why

Food prices have been trending upward for some time now, in response to a number of factors, including the COVID-19 pandemic and Russia's military actions in Ukraine, per USC's Annenberg Media. And it appears there is no end in sight, according to the USDA's Economic Research Service, which has predicted that prices for "food-at-home," which is the term economists use to refer to foods that we gather from the grocery store (as opposed to ordering from a restaurant), will increase by as much as 6% over the course of 2022. And sure enough, for the 12-month period ending in March 2022, food-at-home prices were up by a whopping 10% per the Consumer Price Index (via U.S. Bureau of Labor Statistics). 

The nation hadn't seen a 12-month increase that big since 1981, in case you were wondering. Yet it pales in comparison to the increase in global food prices recorded for the month of March. According to the U.N.'s Food and Agriculture Organization (FAO), the world food price index reached record-setting heights as it climbed almost 13% in March. The FAO emphasized the impact that the war in Ukraine had on markets for grains and edible oils, per Reuters. And things are about to get worse. Just as  U.S. bread prices have risen of late, the price of cooking oil in the U.S. appears poised to "splatter" previous records. 

Palm oil is a bigger deal than you may have thought

On April 22, Indonesia's President Joko Widodo announced the ban, effective immediately, on the exportation of palm oil, per Reuters, the intention being to address growing food insecurity concerns within Indonesia due to the war in Ukraine's impact on the global supply chain. As it turns out, even if palm oil has never made even a guest appearance on your own weekly shopping list, the Indonesian embargo is likely to affect not only the price of palm oil but also the price of cooking oil in general, not to mention the world economy.

First, palm oil is used in as many as 50% of all packaged products that are available for purchase at most supermarkets, according to CNN. And that's just in the U.S. alone. Apparently, 59% of the world's palm oil supply came from Indonesia last year. With Indonesia out of the export picture, demand may quickly outstrip supply, causing prices of palm oil, itself, and everything in which palm oil is an ingredient, to skyrocket. This would be expected to increase demand for palm oil alternatives, thus raising prices for cooking oil in general.

The "good" news is that due to limited space in which to store its palm oil surplus, not to mention pressure from would-be purchasers of palm oil, Indonesia may soon be forced to walk back its embargo, ready or not, according to Reuters.