Food Inflation Set to Rise Amid Energy Price Pressures

Food inflation is likely to rise in the coming months due to high energy prices, according to an agribusiness professor who consults for FMI-The Food Industry Association. Crude oil and diesel prices are affecting industries such as warehousing, cold storage, and long-haul trucking, with costs 'jumping' as a result.

Ricky Volpe, an agribusiness professor at California State Polytechnic University in San Luis Obispo, Calif., stated that higher fertilizer prices due to transport restrictions in the Strait of Hormuz will eventually impact food prices. He noted that corn is a vital input for three-quarters of food and expects corn yields to decrease, leading to higher corn prices.

The impact on specific products, such as a bag of corn chips, may not be felt immediately, with Volpe expecting it to take a year to materialize. FMI Vice President Andy Harig pointed out that trade interruptions can also have an impact on food prices, noting that 40% of imports come from Mexico and Canada.

As prices rise, consumers are returning to eating at home more often and less in restaurants, with grocers offering discounts to maintain customer loyalty. The Consumer Price Index released by the Bureau of Labor Statistics showed that the index for food at home was unchanged in August, while four out of six major grocery store food group indexes increased.