Inflation Might Finally Be Over For These Specific Foods
It was a report that may have flown under the radar when it first came out earlier this month, likely because we'd been seeing news that food inflation is the worst it's been in 40 years. Another study, this time by the Food and Agriculture Organization of the United Nations, indicated it was seeing a drop in its Food Price Index for the third consecutive month. Granted, the downward movement was incremental – while the index was down 2.3% from the previous month, it was still 23.1% higher than a year ago. Even then, it was a price drop that was observed in several categories: vegetable oils, cereals, and sugar, even as the index saw a jump in prices of 1.7% for meat and 4.1% for dairy.
But the price drop appears to be more than just a passing thing, because the cost of certain goods has noticeably decreased, per CNBC. Wholesale coffee prices in Vietnam have dropped almost 5% this month alone; sunflower oil prices are down 7%, palm oil prices are down 12% in India and almost 25% in Bangladesh. Trading Economics also notes that on the whole, wheat prices are down more than 6%, oat prices are down nearly 12%, and sugar prices are down 6%.
There are a number of reasons why some food costs are falling
There are a number of reasons why food costs are down, one of which is that people could be buying less over fears that an economic recession could be just around the corner. Minwoo Nam, a spokesperson for the Korea-based sourcing hub Tridge also told CNBC that buyers could have started picking up different items since the cost of things became too high.
Still, Nam says the price drops shouldn't be celebrated just yet. "Supply chain disruption is still affecting the market, and it is driving up the prices of many products. It doesn't seem likely that food prices suddenly fall into recessionary territory. However, the likelihood of fiercer inflation has decreased," he told CNBC.
At the time the FAO report was released, Bloomberg quoted two JPMorgan Chase economists, Nora Szentivanyi and Katherine Marney, who had written, "Food inflation is set to come off the boil. Given the larger share of food in emerging-market consumption baskets the resulting moderation in headline inflation could be sizable, especially in EMEA [Europe, Middle East, and Africa], which is most sensitive to wheat prices."