Food inflation - statistics & facts

How are changes in food prices measured?

Indexes are a useful tool for gauging price increases across categories. The FAO Food Price Index (FFPI) measures the change in global prices of a basket of food products by comparing current prices against a weighted average of one hundred. The index tracks the most traded food commodities: meat, dairy, cereals, vegetable oils, and sugar. The global food price index averaged an all-time high in March 2022 at 159.3 points. This figure decreased slightly to 157.4 points in May. Secondly, the Consumer Price Index (CPI) is a key national inflation measurement tool designed to track the rise and fall in product prices which also uses weighted averages. A record-high CPI for food and non-alcoholic beverages was measured in May 2022 in the UK. In the U.S., beef and veal was the hardest hit category, with a year-over-year increase in CPI of 16 percent between 2021 and 2022. The forecast for 2022 paints a bleak picture for this category, with further price increases of between three and four percent expected. U.S. consumers are feeling this pinch; over three-quarters of survey respondents recently noticed higher prices for beef and pork.

What is causing food price rises?

According to the aforementioned global food price index, prices began to rise in the early summer of 2020. The economic impacts of COVID-19 lockdowns worldwide, such as product and labor shortages, started to show their faces around this time. Things took a turn for the worse early in 2022; between January 2022 and March 2022 alone, coinciding with the Russian invasion of Ukraine in February 2022, figures increased by over 17 percent. Both Russia and Ukraine are responsible for a large share of global trade in essential agricultural commodities. Pre-invasion, it was forecast that Ukraine would export over 24 million metric tons of wheat, flour, and wheat products in the 2021/22 trade year, an increase of over 40 percent compared to the previous year. The war is likely to hit Ukraine and Russia's output of all agri-food products, causing shortages and further price increases globally.

Along with the assault on Ukraine and the long-lasting global impact of the pandemic, sharp rising costs of energy and transportation, blocks in trade flows, poor crop conditions, and avian flu outbreaks are other factors in pushing up the cost of basic food staples. 

How consumers are reacting: a North American snapshot

Switching to cheaper brands, buying products on sale, and changing retailers are some of the most common changes in purchase behavior due to the recently rising prices in North America. Private label products are generally a cheaper alternative; food categories experiencing the highest level of inflation may see an increase in sales of private label products. Over 60 percent of Canadians are also altering their out-of-home food consumption and eating out less to cut back on spending. As far as consumer opinion goes, the future of food prices is not bright: 60 percent of Americans surveyed in December 2021 expected that the cost of food would get much or somewhat worse, an increase from 50 percent in 2018. A similar picture was painted in Canada, where almost two-thirds of the survey respondents felt that food prices increased much faster than their income. Whether or not this gap will be closed in the near future remains to be seen.

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