Keep knowledgeable with free updates
Merely signal as much as the International inflation myFT Digest — delivered on to your inbox.
Greater costs for staples equivalent to vegetable oils, wheat, cheese and sugar have pushed meals commodity prices to their highest stage in 18 months, signalling extra ache forward for grocery customers and central banks.
The UN Meals and Agriculture Group’s meals worth index rose to 127.4 in October — the best stage since April 2023. The determine, revealed on Friday, was up 5.5 per cent from October final 12 months.
Costs for food commodities have risen steadily because the begin of the 12 months.
Though meals prices stay effectively under ranges reached in March 2022, shoppers are already having to pay extra for groceries as will increase are handed on from meals producers to customers.
Meals worth pressures throughout the G7 main superior economies ticked up for the primary time in two years in September, complicating rate-setters’ makes an attempt to chop charges to help progress and jobs.
Tomasz Wieladek, chief European economist at T Rowe Worth, stated the actions in commodity prices would stoke “meals worth inflation, which is a major problem for central banks”.
The entire G7 central banks, bar Japan, have reduce charges this 12 months on the again of indicators that the worst bout of inflation in a era is lastly underneath management.
However Wieladek famous that the influence of the rise in meals costs on households’ perceptions of inflation could be exacerbated by wholesale prices being priced in {dollars}, a foreign money that has strengthened following Donald Trump’s decisive win on this week’s US presidential election.
FAO economist Monika Tothova stated that the figures urged “a tighter market scenario” for a lot of commodities.
“Whereas not reaching the degrees of earlier peaks, any shock — be it weather-related, a change in commerce coverage, or different components — may exacerbate the scenario in already tight markets,” Tothova stated. “This might have vital implications for worth ranges and availability, affecting meals import payments and meals safety.”
The UN recorded will increase amongst most meals classes, together with a 7.3 per cent month-on-month enhance for vegetable oils, a 2.6 per cent rise for sugar, and a 1.9 per cent enhance for dairy merchandise. Most of the rises have been associated to climate occasions, which decreased output.
Client worth inflation has fallen sharply throughout most nations since reaching multi-decade highs in 2022, however greater meals costs are complicating progress in the direction of central banks’ 2 per cent targets.
Within the US, annual meals inflation in September rose to 2.3 per cent from 2.1 per cent within the earlier month, the most important enhance since August 2022.
Separate information by the Convention Board confirmed that US client inflation expectations for the 12 months forward rose to five.3 per cent in October from 5.2 per cent final month, an uptick attributed to “continued upward pressures on meals and companies costs”.
Within the UK, inflation of meals and non-alcoholic drinks rose to 1.9 per cent from 1.3 per cent in September, marking the primary enhance since March 2023.
Flash estimates for October present that throughout the eurozone, costs of meals, alcohol and tobacco rose at an annual fee of two.9 per cent final month, up from 2.4 per cent in September. Unprocessed meals inflation was as much as 3 per cent in October, from 1.6 per cent in September and 1.1 per cent within the earlier month.
