High fuel costs will continue to contribute to the rise in food costs
“Extreme weather, input costs, interest rates and geopolitical tensions are all playing a part in rising cost of food,” says Curt Covington, senior director of partner relations at AgAmerica, adding that he expects prices to remain high and continue to impact consumers through the rest of the year.
The year-over-year food index component of the CPI was up 11.4% in August. That’s not a surprise, but a “function of the higher prices seen across the food commodities complex, most notably the grains,” says Jake Hanley, managing director and senior portfolio strategist at Teucrium. In August, the United Nations’ Food Price Index, a measure of monthly change in international prices for a basket of food commodities, saw a fifth straight monthly decline but at an average 138.0 points, was still 7.9% above the year-ago level.
— Patrick De Haan, GasBuddy Diesel and natural-gas prices have remained high, despite a retreat in recent weeks, and fuel costs are a key component when it comes to growing the food the nation needs. Diesel engines power about 75% of U.S. farm equipment and transport 90% of farm products, according to data from the Diesel Technology Forum.
While De Haan expects gasoline prices to continue to moderate, diesel “will likely remain near or at historical premiums to gasoline—and could see more disconnect if this winter is cold due to diesel and heating oil being essentially the same product, keeping demand elevated,” he says. As for food prices, they’re not likely to fall back down to prepandemic levels anytime soon, said AgAmerica’s Covington.
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