U.S. consumers are already feeling the pinch of record food prices due to the out-of-control inflation that’s marked the first 14 months of President Joe Biden’s administration.
In January, food prices were up 7.5 percent over January 2021.
The nation’s central bank has raised interest rates to curb inflation… but it might get worse before it gets better.
The war in Ukraine could have an unexpected domino effect, leading to bigger jumps in the price of food – not just in Europe.
It can lead to higher prices here, too.
Both Russia and Ukraine are top suppliers of the world’s grains. The two combined supply more than a quarter of the planet’s wheat, according to The Atlantic, and are major exporters of corn, barley, and cooking oils, especially sunflower oil.
The sunflower is even Ukraine’s national flower.
But Russian crops can’t be exported due to near-global sanctions, and Ukraine can’t do much of anything as it struggles under constant assault.
“The expectation is that those Ukrainian crops won’t get planted this year and that the Russian crops will be embargoed, and so a lot of parts of the world will be in need of imports,” Laura Reiley of the Washington Post told CBS News Mornings. “And so there will be a mad scramble for the excess.”
While the United States doesn’t rely on Russia and Ukraine for those crops, they exist on a global market. A shortage in one place causes nations to turn to another source… leading to tighter supply everywhere, which in turn leads to higher prices overall.
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So just as the invasion led to a spike in oil prices, it’s now expected to lead to a jump in the cost of food, too.
“The upheaval will touch every food consumer on Earth, even those living in food-secure countries such as the United States,” David Frum, former speechwriter to President George W. Bush, wrote in The Atlantic. “If the price goes up for anyone, it goes up for everyone.”
Politico notes that grain prices on the commodities market jumped by as much as 50 percent in the first two weeks of war… and that even attempts to grow more food domestically are getting more costly.
Russia, for example, was a top supplier of fertilizer to Europe, which must now source it elsewhere.
The cost of fertilizer in Europe jumped by 142 percent compared to this point last year.
Here in the United States, fertilizer prices – like the cost of everything else – were already on the rise.
Now, that ripple effect could drive up costs further.
“We’re already seeing energy prices rise and commodities futures for wheat and corn spike. That’s going to prompt concern when costs to make and ship goods continue to set records and consumer demand continues to be above levels not seen since March 2020,” Katie Denis, vice president of communications and research for the industry organization Consumer Brands Association, told the Washington Post. “There is no slack in the system, making weathering disruption significantly more difficult.”
American Bakers Association President Robb MacKie told the newspaper anything with grain will cost more, including beer, cereal, animal feed, and more.
“In a situation where the whole supply chain is already stressed, if [the conflict] goes on more than a couple weeks, you will start to see an impact in food prices,” he warned.
That could lead to even more bad news at the checkout line.
With Americans already shelling out record prices for fuel – also due, in part, to the war in Ukraine and sanctions on Russia – they could pay more than expected for their groceries.
The USDA predicted in February, just before the attack, that food prices would jump 3-4 percent in most categories this year.
Now, that’s looking like it could be even higher.
— Walter W. Murray is a reporter for The Horn News. He is an outspoken conservative and a survival expert.