### Summary
Food prices are increasing globally due to drought conditions, disrupted grain deliveries, and government policies to protect their own supplies. The rising prices are driven by concerns over the enduring effects of a warming climate on production and the possibility of high food prices becoming embedded in the economy. Supermarket profits have increased, but this does not help mitigate the rising costs for consumers.
### Facts
- Wheat prices spiked and then retraced due to Russian missile strikes on Ukrainian ports and disrupted grain exports.
- Erratic weather is depleting rice harvests in India, leading to a ban on rice exports and increasing the risk of higher global prices.
- Food prices in Australia have remained steep, with dairy and breads/cereals leading the price increases.
- Food prices have risen steeply in the UK and France, while prices in the US have increased at a slower pace.
- High global food prices pose a risk of creating an inflationary spiral and are beyond the influence of central banks.
- Australian supermarkets have increased profit margins during the inflationary period, but deny profiteering.
- While the extent of price rises may not be as bad as last year, there will still be an impact on near-term inflation and consumer purchasing power.
🌾 Wheat prices spiked due to Russian missile strikes on Ukrainian ports and disrupted grain exports
🌦️ Erratic weather is depleting rice harvests in India, leading to a ban on rice exports and increasing the risk of higher global prices
🥛 Food prices in Australia remain steep, with dairy leading the price increases
🌍 Food prices have risen steeply in the UK and France, while prices in the US have increased at a slower pace
💰 High global food prices pose a risk of creating an inflationary spiral and are beyond the influence of central banks
🛒 Australian supermarkets have increased profit margins during the inflationary period but deny profiteering
💸 While the extent of price rises may not be as bad as last year, there will still be an impact on near-term inflation and consumer purchasing power.
### Summary
India has imposed a 40% custom duty on onion exports as rising prices have led to concerns about further inflation, with data showing a significant increase in the prices of tomatoes, onions, and potatoes since May.
### Facts
- 🧅 India has announced a 40% custom duty on onion exports to combat rising prices and fears of increased inflation.
- 📉 Vegetable prices, including tomatoes, onions, and potatoes, increased by 87.1% month-on-month in July, compared to 16% in June.
- 💰 The price of onions rose from Rs 22.6 per kg to Rs 28.1 per kg between May and August, representing a 24% increase.
- 📊 Wholesale inflation in food articles reached 14.25% in July, while retail food inflation rose to 10.6% in the same month.
- 🚫 In July, the government had already banned the export of non-basmati white rice, sugar, and wheat to control inflation.
### Summary
The price of rice is rising globally due to higher fertilizer prices, drought in the Horn of Africa, and India's ban on rice exports, which is causing a shortage of 9.5 million metric tons of rice.
### Facts
- 🍚 Rice prices in Kenya have increased by a fifth since June due to higher fertilizer prices and drought in the Horn of Africa.
- 🍚 India's ban on rice exports is an attempt to control domestic prices ahead of a key election year, leaving a gap of around 9.5 million metric tons of rice globally.
- 🍚 Rice prices in Vietnam have reached a 15-year high, and this increase is putting vulnerable people in poor nations at risk.
- 🍚 The El Nino weather phenomenon and the halt of wheat exports from Russia to Ukraine have already threatened global food security.
- 🍚 Other countries may follow India's ban on rice exports, which could worsen the shortage. The United Arab Emirates has already suspended rice exports.
- 🍚 Extreme weather, including the El Nino, could damage rice crops in other countries, further exacerbating the shortage.
- 🍚 Rice consumption in Africa has been growing steadily, and most countries heavily rely on imports. Senegal, for example, is substituting expensive imported rice with locally grown rice.
- 🍚 Asian countries, where 90% of the world's rice is grown and consumed, are struggling with production. The Philippines, the second-largest rice importer after China, experienced rice crop damage due to Typhoon Doksuri.
- 🍚 The restriction on rice exports will make India an unreliable exporter, causing concerns in the export market. Vietnam is hoping to capitalize on the situation by increasing rice exports and targeting new markets.
- 🍚 Thai rice exporters are reluctant to take orders due to uncertainty about India's next moves and concerns about the El Nino, which causes price fluctuations.
### Summary
Key diplomatic partners of India, including Singapore, Indonesia, and the Philippines, are urging India to resume rice exports to their countries after India suspended non-basmati shipments to control prices.
### Facts
- 🍚 Singapore has requested around 110,000 tonnes of rice from India. Indonesia planned to import 1 million tonnes of rice to protect against disruptions caused by the El Nino weather pattern, and the Philippines relies on India for rice supplies.
- 🌍 The UN World Food Programme has sought 200,000 tonnes of Indian rice for its humanitarian operations due to global food insecurity triggered by the Covid-19 pandemic and the Ukraine war. Bangladesh is also in talks with India for agricultural commodity supplies.
- 📉 India has taken measures, including export curbs, to control escalating food prices as retail inflation reached a 15-month high. Prime Minister Narendra Modi pledged to bring down inflation.
- 🛢️ The ban on non-basmati white rice exports has affected global rice prices. Neighboring countries like Bangladesh and Nepal heavily depend on Indian rice, while certain African countries purchase broken rice.
- 📈 Food and beverages inflation, which accounts for nearly 46% of the overall consumer price basket, rose to 10.57% in July. Economists predict that food prices will remain high for the next few weeks before cooling off in September.
Both rice and wheat supplies are facing alarming shortages, raising concerns about a potential world food crisis, and the Indian rice export ban, along with other factors, has implications for global rice markets and prices.
India is facing a rise in food prices due to uneven and scanty rain, prompting the government to take measures to boost supplies and ease inflationary pressures.
India has imposed a 20% duty on parboiled rice exports, which is expected to reduce shipments and increase global rice prices, following previous bans on non-basmati white rice and broken rice exports.
India, the world's biggest exporter of rice, has imposed more restrictions on rice exports in an effort to prevent smuggling and cool local food prices ahead of a general election, further squeezing global supplies of the staple grain.
The Indian government's efforts to control food prices, such as imposing taxes and export bans, may help contain inflation domestically but could lead to higher prices globally, particularly for rice, affecting countries that rely on food imports.
Erratic climate conditions in India, including a dry August, have led to a significant increase in food prices, with onions alone becoming 25% more expensive since June, causing concern about global food inflation as India is a major exporter of rice, sugar, and onions and is a key supplier to many Asian and African countries.
The Philippines has implemented price controls on rice in order to protect consumers from inflated prices and curb inflation, with President Marcos setting maximum prices for regular and well-milled rice.
Global prices for staple foodstuffs have reached a two-year low in August, driven by declines in dairy products, vegetable oils, meat, and cereals, while sugar and rice prices have increased due to export restrictions and extreme weather conditions.
Rising rice prices in Asia, caused by factors such as export restrictions and drought, are expected to have significant spillover effects and could pose challenges for central bankers trying to manage inflation.
Despite a price cap on rice, rising food price inflation is expected in the Philippines due to a weakening exchange rate with the US dollar and a lack of domestic food production.
China's all-sector price index has reached its highest level in 14 months, indicating that the worst may be over for the country's economy and reducing concerns of deflation similar to that experienced by Japan.
The Malaysian government is implementing programs to boost local rice production in response to rising prices for imported rice, as locally grown rice can only meet 70% of domestic demand.
China is increasing its wheat imports to record levels following damage to its domestic crop, as it seeks to secure cheap supplies after heavy rains; the country's growing appetite for wheat adds uncertainty to supply chains already vulnerable to war and protectionist trade policies.
