Tuesday, June 02, 2020

Food Inflation Predates the Supply-Chain Disruptions of COVID-19

Europe was awash in protests on a scale seen neither before nor, arguably, since. The year was 1848. “A specter is haunting Europe,” Marx wrote. “The specter of communism.” Others saw it as the “springtime of the nations,” a surge of liberal nationalist rebellion. Many of his contemporaries, however, perceived something else at work. Contemporary economists now see it too. Beginning in 1845, a series of supply disruptions had sent retail food prices across Europe surging. Food inflation, for neither its first nor the last time, was at least a co-conspirator in a bout of political upheaval. As no country is immune to COVID-19’s disruptions in the food-supply chain, food inflation is now again on the prowl. In the United States, grocery prices last month rose 2.6 percent (month-on-month), their fastest pace since 1974. Yet that rate may be mild compared with what’s in store — or out of stock — for consumers in countries that, like Lebanon, entered the 2020 pandemic in weak economic positions. “Many Lebanese have already stopped buying meats, fruits and vegetables, and may soon find it difficult to afford even bread,” Lebanon’s prime minister, Hassan Diab, warned last week. Food prices were a cause for concern even before 2020’s COVID-19 supply-chain disruptions. By December 2019, world food prices had already climbed to a five-year high. This appears to be due to a combination of long-term trends, such as growth in demand for certain agricultural products, and acute afflictions, including a 2019 swine flu that wiped out much would-be pork...MORE

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