World Food Prices Are Climbing Closer Toward a Record High Due To ‘Fallout From Energy Crisis’ – ‘Oil prices climb to new 7-year high’
(Bloomberg) — Global food prices jumped toward a record last month, further adding to the surging cost of living for consumers.
The United Nations’ index of prices rose 1.1% in January, pushed up by more expensive vegetable oils and dairy. The gauge is edging closer to 2011’s all-time high, and unfavorable weather for crops and the fallout from an energy crisis threaten to keep prices high going forward.
Inflation has been running rampant across the globe, and the latest leg higher in the UN’s food index could further stretch household budgets. The commodities tracked by the gauge are used in most grocery store products or fed to animals from which those items are produced. That’s particularly bad news for the poorest consumers and nations with the least disposable income.
The poorest “segments in the population will feel the pinch the most,” Josef Schmidhuber, deputy director for markets and trade at the UN’s Food and Agriculture Organization, said by phone. “High energy costs and high food costs and high necessities — they account for a large part of their overall expenditures.”
Sugar marked the only commodity that eased during the month, while costs for meat, grain, dairy and vegetable oils rose. Countries spanning Turkey to Paraguay are facing food inflation.
Surging energy prices have bolstered the appeal of crop-based biofuels and raised the cost of fertilizers and fuel for farmers. That could force cutbacks on farm inputs, particularly in developing nations, which may increase reliance on crop imports if harvests falter, Schmidhuber said.
Crude marked a fresh seven-year high above $91 a barrel on Friday, as a harsh winter storm raged in the U.S., piling onto a myriad of worries about supply.
“The latest upswing was triggered by a cold snap in Texas, which is fueling concerns about production outages in the Permian Basin, the largest U.S. shale play. A year ago, a period of extreme cold weather had caused massive disruptions to oil production there,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note to clients.
About 350,000 homes and businesses in states such as Tennessee, Arkansas and Texas were without power in the U.S. on Friday, due to a winter storm that brought amid freezing rain and snow. More heavy snow and ice was expected to hit the eastern portion of the country on Friday.