The effect of food inflation

 The effect of food inflation. The rate at which the cost of goods and services rises over time is known as inflation. In layman's terms, inflation means that as time passes, you get less value for your money. Inflation is responsible for price increases in consumer products, such as when a weekly shopping basket cost £50 a year ago but now costs £60 to purchase the same items.

The effect of food inflation

Price fluctuations for utilities and services are also utilised to calculate the inflation rate. The Consumer Price Index can be used to determine this rate from a consumer's perspective (CPI).

The CPI calculates the cost of an average consumer's basket of goods and services. The Office for National Statistics (ONS) reports that the CPI increased by nine percent in April, with food prices jumping by 6.7 percent specifically. 1 In other words, from April 2022 to April 2022, food inflation increased by 6.7 percent while overall inflation increased by 9.0 percent. The UK's food inflation is forecast to exceed 15% this summer and linger longer than originally anticipated.

Utilizing producer price inflation, one can also assess inflation by examining price changes at manufacturers or producers (PPI). PPI examines changes in both the price of products and services as sold by the producer and changes in the cost of producing goods and services (input measure) (output measure). The PPI input and output measures had risen by 18.6% and 14%, respectively, as of April. 3 An increase in PPI would result in the expense being passed on to retailers, who would subsequently pass it on to customers, helping to drive up inflation.

A global problem

According to the International Monetary Fund (IMF), inflation is currently a global issue, with some nations faring worse than others.

Inflation in developing nations is far worse than it is in emerging economies.

A few nations, including Argentina, Venezuela, Sudan, Ethiopia, Iran, Turkey, and Zimbabwe, experience inflation rates of more than 25%.

In some regions of the world, rising food costs are also provoking rioting and other forms of social upheaval. Riots have taken place, among other places, in Peru, Palestine, Lebanon, Kenya, Iran, and Greece. 5 Will there be other riots if the situation does not change?

Causes of food price inflation

The IMF4 claims that increased energy and food prices last year contributed to inflation. Reduced harvests caused by extreme weather, drought, torrential rain, and flooding put pressure on food supplies. Of course, there were other issues as well, such as the spike in fertiliser prices brought on by rising oil and gas prices.

Global fertiliser prices have also been impacted by Russia and China's stoppage of exports of fertiliser and fertiliser raw materials.

Due to a lack of fertiliser, certain developing nations have seen their yields decline. This will directly affect supply and demand, which will then affect food prices. Supply chain bottlenecks caused by COVID-19 lockdowns in China have also contributed, as demand for some goods began to outpace supply.

Of course, the conflict between Russia and Ukraine has made the problem with the food supply worse. This is due to the fact that both nations export significant amounts of food products. They collectively represent around 25% of the world's wheat exports. 6

The causes of food inflation are complicated, but in a nutshell, increased production costs as a result of higher energy prices and supply pressures on essential ingredients for food production are what are mostly responsible for this increase.

Effects of food inflation on access to and security of food

Food security is also directly impacted by inflation. Due to issues like conflict and climate change, food security was already in crisis, and the situation is getting worse due to rising inflation. Nearly 193 million people worldwide currently experience severe food insecurity. 7 Food insecurity is the inability to consistently obtain an adequate supply of healthy food, either because of a lack of resources like money or because food is simply unavailable.

Since they spend a large amount of their income on food, low-income earners are the ones who are most affected by food inflation. More people fall into poverty as a result of rising food prices making it unaffordable and inaccessible to others who are already suffering.

Additionally, food fraud is one of the problems brought on by food inflation. Food fraud can take many different forms and frequently has an impact on food safety. First, by adulteration, which involves passing off subpar or worse goods as excellent goods.

Second, by omitting or removing elements that should be in the product; third, by purposefully failing to disclose to the consumer that additional substances, such as preservatives and/or colours, have been introduced.

So how are fraud and inflation related? Due to the rising cost of food, dishonest merchants may adulterate their goods in an effort to increase their profits or be able to sell them for less money.

As they search for cheaper food, people with modest incomes are frequently the ones who fall prey to these frauds. There have been reports of plastic rice being sold to gullible customers throughout Africa.

Additionally, formaldehyde has been used to make seafood look fresher, and Sudan Red colouring has been found in palm oil. Additionally, there have been allegations of milk in India that has been tainted with paint, caustic soda, detergent, and refined oil.

Effect of inflation on the availability of food in the UK

The Food Foundation estimates that in April 2022, 13.8 percent of UK households experienced food insecurity. One in five households with children now experiences food insecurity in the UK, which has seen a 57 percent spike in food insecurity since January. 8 In the UK, use of food banks has increased along with the rising cost of living.

Additionally, as more working people struggle to make ends meet, more of them are resorting to food banks. Increased food prices are just one more blow to individuals who are already struggling as a result of rising electricity and fuel expenses.

According to the UN Committee on World Food Security, access to wholesome food that satisfies dietary requirements and food choices for an active and healthy lifestyle constitutes food security. If the readily available food is not of a standard that satisfies the community's nutritional requirements, that community is either experiencing food insecurity or food poverty. Indeed, more people in the UK are experiencing food insecurity as a result of inflation.

Fruits, vegetables, and milk are a few of the food categories with high inflation. There is a good chance that many families may switch to less healthful diets as certain food categories become unaffordable to many households.

These low-quality diets could involve consuming more highly processed foods and foods with a lot of salt, sugar, and fat because they are typically less expensive than those with more nutritional value. In the upcoming years, the long-term ramifications of these connected tendencies will, tragically, become all too clear.