Although food inflation has been hard to miss (just go to a grocery store), it’s getting worse. Inflation in cereals, which drives the costs of other foodstuffs, is accelerating. Bloomberg reports that wheat has just risen to over $10 a bushel as corn and soybean prices are spiking; the Financial Times has a series of articles today on food price inflation.
Notice how the index for shelter is rising even though home prices are falling nationally. This tells me the .3% rise for shelter simply is not happening. This component was seriously understated for many years but is now overstated for the last two years. What is rising however, is the cost of “driving” a home so to speak. Energy (heating and utilities) are soaring but with $400,000 homes (2005 prices) now going for $250,000 in many places, the overall cost of housing for a new buyer has plunged. Unfortunately the debt hasn’t, and that debt is an enormous drag on bank and consumer balance sheets alike.
And Stuart Staniford has bunch of graphs relating to food inflation. He ends his piece by saying…
And there lie the key issues for wealthy citizens of developed nations I think.
In the last year, there have been food riots, protests, or stampedes in Mauritania, China, Senegal, India, Pakistan, Morocco, Mexico, Yemen, Indonesia, and Burkina Faso.
If food prices continue to go up, the world’s middle classes will still be able to afford ample food. But it’s hard to see how, in the long term, we will be insulated from the social and ecological collapses that might get triggered in poor countries.