Why Those Headlines About Rising Food Costs Are So Confusing

There’s more to the story

Grocery Store
Food prices are getting higher. Or lower. Whichever. Rich Johnstone - Flickr/Creative Commons

Buckle your seatbelts: It’s gonna be a wild ride. That’s the message you may have read from news outlets like the BBC this week, with word that world food prices have risen ten percent in just a year. But other headlines seem to directly counter the news, declaring that food prices are, in fact, in freefall. What’s a hungry reader to believe?

It turns out that the food price situation changes depending on the lens through which you look. World food prices are indeed on the rise—according to the United Nations food and agriculture organization food price index, the prices of every food category but cereals and meat are up several percentage points from similar indices last year. But when you drill down to the United States, the picture changes. As Craig Giammona reports for Bloomberg, food prices have fallen for nine consecutive months in the U.S.

Worldwide, rallies in both sugar and dairy costs are fueling the price surge. The cost of dairy is up 14 percent, reports Manisha Jha for Bloomberg, and though grain prices have been falling, pretty much everything else is on the rise. As The Washington Post explains, bad weather is mostly to blame: A Brazilian drought has hurt production of sugar and coffee, putting the pinch on sugar prices. Meanwhile, it’s been a great year for grain, which has shielded cereal prices from rising.

In the Unites States, however, it’s a different story. Giammona notes that the falling food price pattern is practically unheard of outside of a recession, but it’s being driven less by weather than by market forces like supermarket competition and tumbling oil prices. The Voice of Agriculture, a magazine of the American Farm Bureau Federation, writes that the total cost of 16 food items that could be used to prepare one or more meals has dropped eight percent. And when considered individually, the drops are even more dramatic—eggs and chicken breast have fallen 51 and 16 percent, respectively, with the costs of only bagged salad, apples and potatoes rising.

That’s great news for American consumers, who are enjoying the savings even as farmers and grocers freak out. Retailers like Kroger and Sprouts have lowered their fiscal outlooks in response to the price plunges, reports Maggie McGrath for Forbes, for example.

But something could bring American food prices more in line with international norms: Hurricane Matthew. As Ashley Morris reports for the Star News, farmers in North Carolina are hustling to harvest their crops before the storm hits, and the USDA has reminded farmers that it has crop and livestock loss programs that could help. The future of American food prices remains unclear: the storm could hurt national food stores, or its winds could produce the equivalent of a blip on America’s falling-food-price radar.

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