Photo Credit: CNN
Inflation has caused the price of food to skyrocket, but there are some lucky exceptions. For example coffee and avocado prices have gone down in recent months while cooking oil joined the list of the price downs.
The prices for the items mentioned above have gone down, though they’re still higher than their usual selling price.
The price of Indian sunflower oil dropped by 7% between May and June, while palm oil prices also fell 12%, revealed Tridge, an agriculture commodities data group.
The price of avocadoes in Vietnam has gone down by 5% this July, which is compared to when it was at higher during the start of the Ukraine-Russia conflict.
Avocados from the largest producer of the goods Mexico, Peru and Colombia have all decreased in price over the last few weeks.
Mexico’s avocadoes wholesale market was unexpectedly cut by 27% in June and July, while Colombia saw prices drop by almost 40%.
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The booming market of avocado in Peru has had an effect on the pricing of avocadoes across all regions. Sellers were compelled by overwhelming supply, so they’ve lowered prices to compete with the changes of prices.
Fear of recession
The way inflation affects the economy is that it makes people less likely to buy goods, even if those items are necessary for them.
The economy is slowing down and people are resorting to lessened food consumption because they’re afraid that a recession might happen, said Minwoo Nam, Tridge spokesperson.
Nam said, “There are multiple factors affecting the market. First of all, global recession fear is dampening the demand outlook.”
He added, “Also because prices went too high, [so] consumers are spending less or looking for substitutes.” An example would be sunflower oil.
There have been reports that market participants and other traders are liquidating hedge funds in preparation for an economic downturn. But according to Nam, inflation isn’t yet very apparent despite consumers adjusting their consumption of goods.
“We can say concern for food inflation has somewhat abated, but the prices of many agri-products are still high compared to average years. Contractionary policies are certainly affecting the market,” Nam further remarked.
Disruption in the supply chain
The global food supply continues to remain low, despite the increased demand from several countries for necessary goods.
The recent market volatility has been felt around the world, but thankfully many countries are taking steps to help their citizens through this difficult time. This has been commended by Nam, saying that it would help alleviate the troubles of citizens, especially low-income households.
“It doesn’t seem likely that food prices suddenly fall into recessionary territory. However, the likelihood of fiercer inflation has decreased,” Nam added.
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The prices of food, especially the most basic needs that are required to live such as rice and wheat have been greatly increasing lately. This is not surprising considering the disruptions in the supply chain. However, it seems things may be changing soon since last month saw three consecutive decreases to the Food Index tracking done by the Food and Agriculture Organization of the United Nations.
The report shows that the prices of meat and dairy have increased, while cereal grains saw a decrease in cost.
In June, prices of wheat decreased greatly, much more than in May, showed the FAO report. The price, however, is still higher than last year’s by 48.5%.
The news that Russia and Ukraine will resume grain exports over the Black Sea has boosted the mood in East-West trade.
The Nomura chief economist Sonal Varma told the media that prices of commodities have moderately increased in the Asia-Pacific region but not record-high.
The price surges in the second half of this year are likely to be felt around the region. This includes the Philippines, South Korea, Singapore, and India.
Source: CNBC
Opinions expressed by CEO Weekly contributors are their own.
