Inflation: world prices for coffee, cocoa, rice and wheat are soaring

Concerns about rising food inflation are resurfacing as prices for key agricultural products rise. Droughts, frosts and heavy rains are crippling major producers around the world, threatening supply shortages and rising costs.

The Bloomberg index, which tracks nine agricultural products, has set the pace since the start of the year and posted its biggest weekly gain since July last year. While the 2022 peak is still a long way off, the data is bleak: It could ultimately mean higher consumer prices, from bread to drinks, after a period of subdued inflation.

“Climate change and geopolitical concerns are likely to keep crop prices high,” said Paul Bloxham, chief global commodities economist at HSBC Holdings Plc.

Chicago wheat futures held at their highest level on Friday as poor weather in major exporting countries from Australia to Russia raised supply concerns. “Deteriorating harvest prospects in Russia contributed to growth,” Dennis Voznesensky, deputy director of sustainable and agricultural finance at the Commonwealth Bank of Australia, said in a weekly report.

Arabica coffee prices – another component of the index – showed their biggest weekly gain since April. Orange juice price close to a record due to a fall in the harvest in Brazil, weather conditions also pushed up prices for asian rice on the verge of a 15-year high, notes the Bloomberg news agency.

In addition, cocoa bean futures in New York showed a weekly increase of almost 10%. Prices are expected to remain high throughout the current harvest, supported by market fundamentals.

If inflation rises again, the situation will become more complicated with regard to central banks and the level of interest rates. Central banks around the world are preparing to move into interest rate cutting mode as they now see consumer prices fluctuating. In fact, next week, June 6th, it is considered almost certain that The European Central Bank will announce interest rate cuts in a historic move. writes the publication Economistas.

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