Delayed Inflation: Food Prices Set to Rise Amid Ongoing Global Pressures

Food inflation may appear relatively subdued today, but experts warn that calm could be misleading. Many of the pressures driving higher costs across the food system have not disappeared, merely delayed by factors such as hedging and stock positions.

The strategic landscape for food and drink businesses is bleak, dominated by conflict, extreme weather, and trade disputes. Despite these drivers, food and drink inflation seems muted in Europe, the USA, and the UK at present.

One reason for this muted inflation is better management of cost change. Global food and energy stocks were plentiful at the start of the year, allowing buyers to take advantage and hedge aggressively.

Hedging tends to delay inflation but cannot prevent it entirely. The forces of supply and demand will eventually respond to shortage and surplus, leading to price increases.