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Food Inflation Will Hit Millions Hard

Staff and volunteers at the Hungry Monk food pantry prepare and distribute fruit and vegetables to … [+] local residents at their church in Queens, New York on March 26, 2022. – The Hungry Monk pantry, which aims to address food insecurity and homelessness through the distribution of free food and medical supplies, is one of many across New York facing abrupt cutbacks of around 75 percent as the city’s temporary Pandemic Food Reserve Emergency Distribution Program (P-FRED) is scaled down. (Photo by Ed JONES / AFP) (Photo by ED JONES/AFP via Getty Images)

AFP via Getty Images

Inflation is a pain for everyone. But the high numbers you’ve been hearing are incomplete. The consumer price index—known as CPI and based on observed price increases on sample baskets of goods—is scary enough when you look at the 12-month 6.4% growth rate. Now recognize that figures don’t include energy or food prices in the mix.

The reason is the desire to understand basic financial forces and predict the future. Energy and food frequently exhibit large amounts of volatility that make predictions exceedingly difficult. So, out they go.

When people hear the inflation numbers, food can be higher or lower, and it can change more rapidly. Unfortunately, right now is not a good time for consumers who don’t have the financial resources to weather price jumps because food has been getting more expensive and will continue to do so.

The Food and Agriculture Organization of the United Nations noted in February 2022 that its global food index hit an all-time high.

“The FAO Food Price Index (FFPI) averaged 140.7 points in February 2022, up 5.3 points (3.9 percent) from January and as much as 24.1 points (20.7 percent) above its level a year ago,” the organization wrote. “This represents a new all-time high, exceeding the previous top of February 2011 by 3.1 points. The February rise was led by large increases in vegetable oil and dairy price sub-indices. Cereals and meat prices were also up, while the sugar price sub-index fell for the third consecutive month.”

The New York Times quoted Maurice Obstfeld, senior fellow of the Peterson Institute for International Economics and a former chief economist of the International Monetary Fund, who said it “wasn’t much of an exaggeration” to say the world is approaching a global food crisis. Vegetable oils were up 8.5% year over year; meat jumped 15.3%. Cereals were up 14.8%.

In some parts of Latin America and Africa, people regularly spend 50% to 60% of their income on food. Average food inflation across the globe hit almost 6.9%, according to IMF data.

Prices have jumped particularly quickly of late in the U.S., with food prices up 7.9% year over year in February 2022, according to the Bureau of Labor Statistics. “Prices for meats, poultry, fish, and eggs increased 13.0 percent for the year ended February 2022, the largest yearly increase since July 1979. From February 2021 to February 2022, fruits and vegetables prices rose 7.6 percent, and nonalcoholic beverages and beverage materials prices rose 6.7 percent.”

One reason is that farmers are feeling production pressures with rising costs, according to the Wall Street Journal. Labor’s up and so are machinery, fuel, fertilizer, crop seeds, and weed killers. Food price increases in 2022 could be more of the same.

A USDA study released last September found that while 89.5% of U.S. households had food security—”consistent, dependable access to enough food for active, healthy living”—the remainder did not. “The remaining 10.5 percent (13.8 million households) were food insecure. Food-insecure households (those with low and very low food security) had difficulty at some time during the year providing enough food for all their members because of a lack of resources. The 2020 prevalence of food insecurity was unchanged from 10.5 percent in 2019.” About a third of that group had “very low food security,” which means “the food intake of some household members was reduced, and normal eating patterns were disrupted at times during the year because of limited resources.”

With the ongoing growth of inflation, it would seem logical that the number facing food insecurity would easily grow.

Where will help come from? Probably not the federal government, which is tugging back and forth over a new budget and where money should be spent. But even if there were more money allocated for human aid, the budget is for fiscal year 2023, which doesn’t start until October 1, 2022.

Food pantries are already feeling the pinch, whether in New Jersey, Las Vegas, Chicago, or many other parts of the country. What will happen? Who knows? And who cares? Clearly not enough people.