Food inflation remains stubbornly high in U.S., Europe: MarketWatch

NEW YORK, Aug. 5 (Xinhua) -- The pace at which food prices rise matters not just because it directly impacts household budgets, especially for those at the lower end of the income distribution, but also because the visibility of food price changes helps to shape the public's expectations of inflation which itself can contribute to higher inflation, reported MarketWatch on Wednesday.

Annualized food inflation is now 8.8 percent in the United States and the eurozone, up from an average of 1.6 percent in the decade before the pandemic, the report said.

Food prices started to increase in mid-2021, as higher distribution costs, labor shortages, commodity price increases and persistent shortages affected the sector. In 2022, this trend was exacerbated by the war in Ukraine, with food inflation increasing in developing countries first, and more recently in developed economies, according to the report.

"Relative to historical standards, the increase in food inflation has been greater for developed countries," said the report, noting that much of the increase in food commodity prices was passed on into retail prices in many countries around the world.

While food inflation has shown declines in the most recent data for emerging economies, it remains stubbornly high for the United States and the eurozone continuing to increase at a rate of over 1 percent per month, it said.

"One reason for the more persistent food inflation in developed countries may be the persistence of supply disruptions and shortages of food products that began with the pandemic," it added.