An unlucky combination of extreme weather events, geopolitical worries and other supply disruptions have been the main factors.
The period of very stable global food prices thus seems to be over for now.
After a prolonged period of hibernation, global food prices are once again making headlines. Since the beginning of the year global food prices have surged. The CRB Foodstuff sub-index has risen more than 15% since the start of January and the change in February alone marks the largest monthly increase in three years. Overall, there are three factors in play which can explain the price increase:
- Extreme weather
- Geopolitics
- Supply disruptions
The price increase follows a period where stable food prices have contributed to a decline in consumer price inflation in a number of economies. Although we do not expect the recent pickup in prices to continue at current pace, the price spike serves as a warning not to get too comfortable, as prices can rise quickly. In this research note, we take a closer look at the recent impact on global food commodity prices from the above three sources.
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