Opinion – Vinicius Torres Freire: World food inflation is the highest in 32 years

The price of meats, grains, dairy products, oils and sugar has not been this high for at least 32 years, according to the accounts of FAO, the United Nations Food and Agriculture Organization. High in real terms, discounting other inflations in the world economy.

American inflation, gasoline in particular, helps to bring down President Joe Biden’s popularity. US consumer prices rose 8.5% in March (compared to March last year), the fastest pace in more than 40 years. Food at home (“groceries”) increased by 10%.

In France, prices rose less, 4.5%. But they were the subject of the final weeks of the election campaign, which helped put Marine Le Pen on President Emmanuel Macron’s heels. The far-right candidate promises to cut excise taxes on everyday goods. In Euro Europe, annual inflation is at 7.5%. In Brazil, at 11.3%.

Will there be refreshments, for food prices or general inflation? The guess depends on what will happen with the war in Ukraine, with the production problems of world industry or with the epidemic, in particular in China. Covid outbreaks make the Chinese close factories, ports or entire regions, further disrupting the supply of increasingly debauched globalization.

In the most banal observation, the numbers of the stock exchanges and of the international quotations, it can be seen that the barrel of oil has calmed down to a very high degree since March (up of about 35% in the year). In April, grains continued to increase in price. In the year, the shortage of wheat (43%), corn (31%) and soybeans (26%) is still terrible. Meat and sugar calmed down.

At these levels, however, prices as essential as energy and food have already eaten up the purchasing power of the world’s poor and well-off, including the European and American “middle class”. There will be no falling prices or rising wages anytime soon. There is a risk of social and political turmoil—yes, we have plague, war and inflation.

In one year, the FAO price index increased by 33.6%. At the turn of 2010 to 2011, it rose to about 30% per year. That’s when the social and political uprisings called the “Arab Spring” began. To say that they were caused by the lack of food is an exaggeration, but not much (the even greater rise in prices in 2008 did not lead to revolutions).

Global food inflation had been rising sharply since October 2021 as economies gradually resumed, but had stalled at record levels around the turn of the year. The war provoked a somersault. However, there are problems that precede the Russian invasion of Ukraine and they have not had any refreshment.

Even if a miracle ends the war, the effects of the conflict will persist for some time, particularly with regard to fertilizers, grains, wheat and oils. The global rise in interest rates will bring down the growth of economies, it is not yet known how much, which may contain the famine. But, as seems obvious, it will only be good (less inflation) if it is bad (less growth).

In Brazil, there could be relief due to the devaluation of the dollar against the real (more than 17% since December) and the reduction in the price of electricity. However, inflation is widespread and may already cause some snowball effect (inertia). The cost reduction would depend on a lower dollar for a few months. But it is necessary to remember that the cheaper dollar is no match for a barrel still up 35% in the year. In addition, the electoral campaign is coming, with its nonsense and generators of uncertainty, which usually throw the real to the ground.