Hard realities of food prices

The driving forces behind food price increases have been present for months now. The supply-chain challenges of covid19 have been pushed into higher gear by Russia’s invasion of the Ukraine, which shut down grain exports from that country and brought sanctions on Russia that have created additional pressures on that country’s petroleum exports.

But these triggers are only the most recent in a running trend of increases in the cost of food.

The Food and Agriculture Organisation (FAO) has published the Food Price Index since 1990. In January 2022, it registered its highest rise since the rating was established. The FAO’s index rose by 55 per cent between May 2020 and February 2022, led by a 159.4 per cent rise in the price of edible oils.

The World Banks Food Commodity Price Index tracked an increase of 15 per cent between March and April over January-February in 2022, with prices rising 80 per cent over the last two years.

The Baltic Dry Index records cost-of-freight increases as high as 400 per cent since March 2020.

Between January 2019 and January 2022, the price of fertiliser roughly tripled.

The Central Bank, in its most recent monetary report, recorded increases in headline inflation and in the cost of food, which has risen to 8.7 per cent from 7.9 per cent since April, noting that the effect on domestic prices was externally generated.

Like ripples from a stone tossed in a pond, these increased costs washing ashore have the most devastating effects on low-income citizens, who are poorly positioned to weather the rising price of basic foodstuffs, as of everything else.

Supermarket Association (SATT) president Rajiv Diptee sought to distance the association’s members from price hikes that are almost double the recent 33 per cent flour price increase. Mr Diptee asserted that any price-gouging was taking place among supermarkets and vendors outside the association.

That distinction will be lost on families struggling to stretch limited income to meet rapidly rising prices at the cash register.

The Trade Minister hasn’t helped matters by creating an adversarial relationship with retailers by warning that their identities were known to the government and threatening them if they fail to be “reasonable.”

This is not a time for playing to the gallery of public opinion with vague threats that solve nothing. The government has common purpose with SATT and other food retailers, and will achieve more by seeking to pool useful ideas and working with and not against them.

A publicly available schedule of recommended price ranges for staple food products, regularly updated as prices rise and, hopefully, fall, might provide a helpful reference for the shopping public.

The issue is heated enough without adding political brinksmanship to the mix.