Inflation and Food Prices
Inflation is supposedly coming down, right? Go to the grocery store and it sure doesn’t feel that way.
We continue to watch CPI and PPI numbers very carefully for clues about the direction of prices. Inflation is still too high.
Our investment strategy is focused on investing on the assumption that rates will be higher than many expect, inflation will be stubbornly high, and volatility will be the 2025 theme.
A recent CNBC article highlighted this issue.
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”Global food prices recently rose to an 18-month high, with some food baskets expected to continue climbing, according to market watchers.
In October, world food commodity prices were at their highest since April 2023, according to the most recent data compiled by the United Nations’ Food and Agriculture Organization.
The FAO Food Price Index, which monitors the prices of five food baskets: grains, meat, dairy, vegetable oils and sugar, rose by 2% in October, driven primarily by a surge in vegetable oil prices.
From January to October, the vegetable oils category had the largest price spike, jumping 24% on the back of higher prices for palm, soy, sunflower, and rapeseed oils. That was followed by FAO’s dairy category, which rose 17% from the start of the year, led by cheese and butter prices. The gauge’s meat category increased 10% since the start of the year.
Conversely, the cereals category, which largely comprises wheat and rice, dipped 4.5%, while sugar declined almost 5% year on year. Supply-side factors, ranging from weather to transportation challenges, have been the main drivers, analysts concurred.
The index measures raw commodity prices rather than retail costs, but the increase suggests that higher food prices may continue to affect consumers.”
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