The UN’s food price index is down about 20% from a record set a year ago, and further declines are expected. Mintec, a price-reporting agency whose clients include some of the biggest food companies, is now deploying algorithms to better forecast future costs. Prices of most food commodities will be falling, mainly driven by macroeconomic factors such as GDP growth, the rate of new orders, and business inventory levels, according to Lasse Hvid-Jørgensen, director of forecasting operations.
Supermarket shelves may also be cooling down. As Bloomberg Opinion’s Andrea Felsted argues, if history is anything to go by, it won’t be long before some of the food cost is “competed away” by food retailers battling it out for sales.
Several UK retailers have recently cut prices of essential items like bread, milk, and butter. However, that’s not to say the cost-of-living crisis will end anytime soon. Bank of England Governor Andrew Bailey warned that higher food prices and a tight labor market could cause the crunch to persist. Food price inflation was still extremely high, and while producers expect costs to moderate, there was uncertainty around how long it would take for this to feed through into consumer prices, he said.
Photo source: Dreamstime.com