Food inflation across 38 industrialised nations has fallen to 5.3%, its lowest since the start of the Ukraine invasion, signalling a drop in consumer food prices and a positive outlook for global economies.
Food inflation in 38 industrialised countries has descended to its lowest level since Russia’s full-scale invasion of Ukraine, according to recent findings. February saw the annual rise in consumer food prices drop to 5.3%, a decrease from 6.2% in January, with a notable peak at 16.2% in November 2022, as reported by the Organisation for Economic Co-operation and Development (OECD). This decline reflects a broader trend of falling global food commodity prices, including cereals and dairy products, easing the rapid inflation witnessed over the past years.
In the United Kingdom, food price inflation reported a significant decrease, reaching a two-year low last week, indicative of a gradual yet positive shift for consumers within the nation. Experts, including Carlos Mera from Rabobank and Tomasz Wieladek from T Rowe Price, attribute this disinflationary trend to a combination of factors such as the reduction in agricultural commodity prices following the Ukraine conflict, the normalization of supply chains, and decreased gas prices. Despite these drops, the overall cost of food remains on an upward path, tempered by the slow adaptation of retail prices to changes in wholesale costs.
Different rates of inflation are observed globally, with countries like Turkey and Nigeria still facing high food inflation rates, whereas the US and the UK enjoy a significant decrease. Nonetheless, a consensus among experts suggests that the ongoing reduction in wholesale prices, especially for cereals, will foster continued disinflation across most economies in the months ahead.
This trend of decreasing food inflation is met with optimism regarding economic stability and growth, notably within the UK where industry surveys indicate an upturn in output levels. The developments come amidst financial market speculations on how central banks might adjust interest rates in response to changing inflation dynamics. Furthermore, the FAO has noted a general decrease in foodstuff prices from their 2022 peaks, offering a glimmer of relief to global consumers. These observations are part of a broader anticipation for upcoming inflation updates from the OECD, underscoring a positive development for households grappling with the price surges of recent years.
