Why Food Prices Continue To Increase Despite Falling World Markets

by Joshua Brown
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A restaurant near Nairobi has made their chapatis (a type of flatbread) smaller to save on cooking oil. People in Pakistan have stopped buying meat, like beef or chicken, because it is too expensive. In Hungary, a cafe had to take burgers and fries off its menu due to the high cost of oil and beef.

All over the world, food prices are really high and it’s confusing too. The prices of things like grains, oil, dairy and agricultural products have dropped from the highest cost ever. But people still can’t afford to pay for their meals like Linnah Meuni, a mother of four in Kenya who cannot buy lunch or dinner most of the time because she needs to use her money for rent and school fees instead.

She tells us that a 2-kilogram (4.4-pound) bag of corn flour costs twice as much as she earns from selling vegetables in her kiosk in a day.

This was already happening before Russia attacked Ukraine last year and it made food prices go even higher. But this problem has been long gone now across the globe.

Food prices have been going down for the past year because of good harvests from places like Brazil and Russia. This is also due to a temporary agreement that allows grain to be shipped out of the Black Sea. According to the United Nations, this means food prices are lower than before Russian troops entered Ukraine.

The prices of food seem to be always going up and it’s hard for people to avoid them, especially in poorer countries. This is causing a lot of trouble with inflation all around the world, not just in the U.S. and Europe.

According to Ian Mitchell, an economist with the Center for Global Development, food markets are connected all over the world, so when global food prices rise we feel it no matter where we live.

Do you ever wonder why food prices keep going up everywhere? Joseph Glauber, an economist from the U.S. Department of Agriculture explains that it isn’t just oranges, wheat and livestock that are getting more expensive. Prices are increasing all around the world in bazaars, grocery stores, and even on kitchen tables

Last month, the prices of food in America increased by 8.5%. This is because 75% of its cost comes from energy costs, processing and manufacturing fees, transportation expenses, and labor wages.

Food prices have increased rapidly in the European Union and U.K. during the past month, with increases of 19.5% and 19.2%, respectively – which is the biggest increase in nearly 46 years! However, even though these food prices may come down eventually, there are still a lot of high costs that won’t be going away anytime soon.

President Joe Biden believes that too many mergers have reduced competition in the food industry. This has resulted in just four meatpacking companies controlling 85% of the U.S. beef market and 70% control over pork, plus 54% control over poultry products. These companies are believed to be raising prices by exploiting their market power.

Glauber, who works at the International Food Policy Research Institute, doesn’t think that having very few big companies controlling the food supply is why food prices stay so high. Even though these companies can make a lot of money when prices get expensive, they usually don’t make as much money in bad times.

He said that there are a few different reasons why prices are going up – one of them is the strength of our dollar compared to the rest of the world. This isn’t the same reason that food prices went up in 2007-2008, so it’s hard to figure out why it’s happening this time.

Right now, the U.S. dollar is very strong and that’s making prices for wheat and corn higher when we convert them into other currencies. There are also natural causes of food shortages in different places, like a drought in Kenya, or war in Ukraine which can make prices even more expensive and not come down as much.

Corn flour is a very important ingredient in Kenyan households, and it’s used to make corn meal called ugali. Unfortunately, its price has doubled over the past year due to President William Ruto not giving subsidies to the people. He did promise though that he would eventually help lower the cost of corn flour. Millers had to buy expensive wheat from overseas last year, which made their production costs higher because more money was needed for fuel bills.

Because of increasing prices, many small Kenyan restaurants have had to charge more for their food, sometimes even providing smaller portions. For example, Mark Kioko says that he had to reduce the size of their chapatis in order to keep up with high cooking oil costs. In Hungary, citizens are struggling too because food prices recently hiked up by 45% in March.

Cafe Csiga in Budapest has to increase its prices by almost 30% due to rising prices of ingredients. The manager, Andras Kelemen, said that their chef watches the ingredient costs closely and monitors them daily for better control. As a result, burgers and French fries have been removed from the menu.

Joszef Varga works at a fruit and vegetable shop in Budapest’s Grand Market Hall. He said the price of his products have increased by 20-30%, so customers can tell that things are more expensive and they’re not happy about it. He also noticed that people who had more money still bought more, while those with less money ended up buying less.

Mohammad Ali, a shop owner in Pakistan noticed that some of his customers are choosing not to buy meat and instead just getting vegetables and beans. Even those food items have gotten more expensive, with prices rising up to 50%. Zubaida Bibi, who is 45 and lives in a mud-brick home outside the capital of Islamabad, claims it has become so tough financially since everything got so expensive.

This month, Bibi was standing in a long queue to get free wheat from the government of Prime Minister Shahbaz Sharif during Ramadan. She works as a cleaner and makes only 8,000 Pakistani rupees ($30) each month.

Bibi mentioned that she and her children want other things but they don’t have the money to buy food. The little money she has is given to her by her younger brother Sher Khan; however, he may be unable to keep his tea stall business running due to increasing petrol costs.

“My budget is in trouble because prices keep going up,” he said. “I don’t have enough money to buy all the things I need.”

People from Washington and Nairobi, Kenya sent reports about this. AP also had journalists in Islamabad (Pakistan), Budapest (Hungary), and London who wrote updates too.

If you want to get more info about the food crisis, go to https://bigbignews.net/food-crisis.

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