One of the key drivers involved in food prices is climate change. In the U.S. for instance, the Texas winter storms did more than just knock out power and leave homes in the dark and cold; they also wreaked havoc on food crops and livestock. One insurer believes that $600 million worth of food was wiped out, and while money can be minted and made back, it will take time to grow what’s been lost. The storms destroyed leafy greens, onions, and citrus fruit including lemons, limes, and grapefruit. Gone too are 14 million gallons of milk, as well as cattle and poultry. The impact of that loss will be felt in the food supply chain for months to come (via New York Times).
Food producers are also struggling to get around rising transport costs triggered by unstable gas prices, whose volatility was triggered by the sudden drop and surge in demand due to COVID-19. Because no one was traveling last year, gas prices fell and stocks rose, but demand came back just as suddenly, leaving oil producers scrambling to meet the need (via NBC).
Phil Lempert of SupermarketGuru.com tells NBC that food prices could continue to skyrocket for another year, while The Balance quotes the USDA as saying price increases will normalize somewhat after supply shortages are worked out. Unfortunately, with two such disparate views, those of us on the buying end can only wait and see what happens next.