The rate at which the prices of goods and services continue to rise over a given period of time is referred to as inflation. To put it another way, inflation is the gradual erosion of the purchasing power of money over time. If we take consumer goods as an example, let's say that a weekly shopping basket cost you £50 a year ago, but it now costs you £60 to buy the exact same items, we can say that the increase in price may be attributed to inflation because the prices of consumer goods have increased.
Alterations in the costs of services and utilities are also factored in when calculating the rate of inflation. Using the Consumer Price Index, one can get an accurate estimate of this rate from the perspective of a consumer (CPI). The Consumer Price Index (CPI) is a measure of the value of an average basket of goods and services purchased by consumers. In April, the Consumer Price Index (CPI) experienced a percentage change of nine percent, as reported by the Office for National Statistics (ONS). The price of food notably increased by 6.7 percent during that same month. To put it another way, during the past year, up until April 2022, overall inflation has increased by nine percent, while food inflation has increased by six points seven percent. This summer, food inflation in the UK is projected to exceed 15 percent, and it is now anticipated that this trend will continue for a longer period of time than was originally anticipated.
The Producer Price Index is another method that can be used to monitor inflation. This index looks at how prices have changed at the companies that make goods (PPI). The Producer Price Index (PPI) examines not just how much it costs to create products and services (the "input measure") but also how much those goods and services are going for on the market (the "output measure") (output measure). The PPI input and output measures had each climbed by 18.6 percent as of the end of April, with the output measure increasing by 14 percent. An increase in the PPI would result in the cost being passed on to retailers, who would then pass this cost on to their customers, which would contribute to an overall rise in consumer prices.
A worldwide issue
According to the International Monetary Fund (IMF), inflation is currently a global problem; however, some nations are being affected by this issue more than others. When compared to wealthy nations, the rate of inflation in emerging economies is significantly higher.
The projected levels of inflation for 2022 are displayed in Figure 1. Several nations, including Argentina, Venezuela, Sudan, Ethiopia, Iran, Turkey, and Zimbabwe, are currently grappling with inflation rates of over 25 percent.
Rioting and other forms of social unrest are occurring in various regions of the world as a direct result of rising food costs. Riots have broken out in a number of countries recently, including Peru, Palestine, Lebanon, Kenya, Iran, and Greece, to name just a few. Will there be additional protests if the current situation does not improve?
The factors that drive up the cost of food
According to the International Monetary Fund (IMF), inflation was driven up by rising energy and food prices in the previous year. Reduced harvests as a result of adverse meteorological conditions such as drought, excessive rainfall, and flooding have put a strain on available food supply. There were also other factors at play, such as an increase in the cost of fertilizer that was brought on by rising oil and gas prices.
The cessation of exports of fertilizer and raw materials for fertilizer production by Russia and China has also had an effect on the price of fertilizer on a worldwide scale.
According to the International Monetary Fund (IMF), inflation is a problem that exists all across the world right now.
This will have a direct impact on supply and demand, which will in turn have an impact on food prices. Yields in some developing countries have decreased as a result of a lack of fertilizer, which has led to this situation. As a result of COVID-19 lockdowns in China, there have been bottlenecks in supply chains, which has also been a contributing factor. As a result, demand for some commodities has started to exceed supply.
The conflict between Russia and Ukraine has, without a doubt, made existing problems with food supplies even worse. This is due to the fact that both nations are significant players in the global food commodity export market. They are responsible for almost one fourth of the total wheat exports worldwide.
Indeed, there are numerous factors that contribute to food inflation, but in a nutshell, it can be broken down as follows: growing production costs as a result of rising energy costs, in addition to supply pressures of major food production inputs, are the primary factors behind this elevation.
Food inflation's effect on availability and affordability
The availability of food is also being directly threatened by inflation. The food security situation was already in a critical state due to variables such as war and climate change; the current upward trend in inflation is making the dilemma much more severe. Nearly 193 million people all over the world are currently struggling with severe food insecurity. The state of not having regular access to safe and nutritious food is known as food insecurity. This can be caused by a lack of resources such as money, or it might simply be the result of their not being enough food.
Because of the significant proportion of their income that is spent on food, those with low incomes are hurt the hardest by inflation in the food industry. These folks, who are already having a hard time making ends meet, are put in a position where they are unable to pay or get their hands on food when prices go up, which leads to more people falling into poverty.
Food fraud is one example of the additional difficulties that accompany rising food prices. Food fraud, in the vast majority of cases, has ramifications for food safety and can manifest itself in a variety of different ways. To begin, by means of adulteration, which refers to the practice of marketing inferior or substandard goods as premium goods.
Secondly, by removing constituents that should be in the food or omitting to include them; and thirdly, by knowingly failing to inform the consumer that other ingredients have been introduced, such as preservatives and/or colors. These are all examples of food adulteration.
So what is the connection between fraud and inflation? Adulteration includes economic incentives; with growing food prices, shady merchants can adulterate their products in an effort to make more money or to be able to sell them at cheaper price points. Adulteration is a form of food fraud.
Because they are more likely to be searching for food that costs less, people with low incomes are most likely to be the ones who become victims of these fraudulent operations. There have been reports of plastic rice being marketed to people in Africa who are unaware that they are buying it. In certain instances, fish were made to look fresher by being treated with formaldehyde, and there have been reports of the use of Sudan Red dye in palm oil. Additionally, there have been allegations of milk in India that have been tainted with paint, refined oil, caustic soda, and detergent.
The Effects of Inflation on UK Food Security
In April 2022, 13.8 percent of households in the UK were said to be experiencing food insecurity, as reported by The Food Foundation. The number of households in the United Kingdom that are struggling to put food on the table has climbed by 57 percent since January, and this problem affects one out of every five households that have children. The ever-increasing expense of living in the UK has led to an increase in the number of people turning to food banks for assistance. As more working people struggle to make ends meet, an increasing number of them are turning to food banks for assistance. Those who are already having trouble making ends meet face an uphill battle when their already high energy bills and transportation expenses are compounded by rising food prices.
According to the United Nations Committee on World Food Security, having access to nutrient-dense eating that satisfies one's food choices as well as the dietary requirements for leading an active and healthy lifestyle is the definition of food security. A community is considered to be food insecure or to be in danger of falling into food poverty if the quality of the food that is easily accessible does not match the nutritional demands of the population. Inflation is, in fact, making life more difficult for a growing number of individuals in the UK.
A number of food categories, including milk, meat, fruit, and vegetables, are experiencing high inflation rates. It is anticipated that many families will transition to diets that are less healthful as a result of these food categories becoming inaccessible to a large number of households. These poor quality diets may contain greater intake of highly processed foods as well as foods that are rich in salt, sugar, and fat. This is possible since highly processed foods and foods high in these three nutrients tend to be less expensive than those with higher nutritional quality. Over the next few years, the long-term ramifications of these interconnected patterns will, unfortunately, become all too apparent.
