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Food prices rise and fears grow about global economic recovery in a world hit by the pandemic.
According to the Food and Agriculture Organization of the United Nations (FAO) food price index, these rose at their fastest monthly rate in more than a decade.
Prices also registered an increase for 12 consecutive months, to reach its highest value since September 2011.
The UN Food Price Index tracks how much consumers around the world would pay on average for a basket of everyday staples.
These include grains, oilseeds, dairy products, meat, and sugar.
Why are prices increasing?
All five components of the index rose, driven by rising costs for vegetable oils, grains and sugar.
According to the index, food prices in May were 4.8% more expensive than in April, the largest monthly increase since October 2010, and 39.7% higher than the same month of 2020.
As expected, the increase is related to the pandemic.
Suppliers have been affected by disruptions in production, labor, and transportation.
And in the meantime, the demand for food is growing.
Experts had warned that high demand and low production would lead to rising inflation as economies emerged from the restrictions imposed by the pandemic.
However, some industries could see a strong recovery.
FAO forecasts a record world cereal production this year, which can help alleviate upward price pressures.
Why is inflation a concern?
Inflation is the rate at which the prices of goods and services increase.
In addition to showing a snapshot of the price of purchases and services, it influences interest rates and therefore mortgages and other regulated prices, such as train tickets, for example.
This is one of the key measures of financial well-being, because it affects what consumers can buy for their money. If there is inflation, the money is not enough.
However, a little inflation often encourages people to buy products sooner and makes it easier for companies to raise wages. And both things drive economic growth.
Most countries’ central banks have an inflation target of between 2% and 2.5%.
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