Global Food Prices To Hit Record Levels From Rising Oil Prices

Monday, February 14th, 2022 | 383 Views

More Food Inflation Pain to Come From the Ubiquitous Cooking Oil

Soaring costs of steaks, pasta and coffee have dominated headlines and pushed global food prices close to record levels. But it looks like the dubious accolade of sending the inflation gauge across the line will fall to cooking oils, those understated yet most ubiquitous of staples.

Used for everything from frying potato chips to mixing salad dressings, edible oil prices have more than doubled in the past two years on supply constraints. Palm oil hit a new all-time high this week as top shipper Indonesia limited exports to protect the domestic market, while soybean and rapeseed oil have also risen as heat and drought wilted crops and demand surged. All this means that food prices may go up even more.

A measure of global food costs calculated by the United Nations climbed near to a record in January, driven by more expensive vegetable oil and dairy prices. A further rise this month could potentially push costs beyond that to a fresh all-time high. The rally is hitting India particularly hard because the country is the world’s biggest importer of palm, soybean and sunflower oil.

Cooking oils play a crucial role in feasts served to celebrate festivals across the nation. The government has taken steps to cool prices, reducing import duties and limiting inventories to prevent hoarding, but inflation pressures will be hard to quell.

Consumer food prices in India rose in December at the fastest pace in six months, crimping household budgets and increasing pressure on Prime Minister Narendra Modi’s government to provide more help for the poor. Two-thirds of the country’s population are already the recipients of food aid.

“The high prices of food items including edible oils are hurting us,” said 41-year-old Anita Nath, a housewife in the eastern Indian state of Odisha. “Rising prices are putting pressure on our monthly budget at a time when my husband’s income has fallen because of Covid-related restrictions.”