Inflation GettyImages-1011310720

Just as we thought food inflation was starting to ease – as fuel, energy, transport and key commodities including cooking oils, dairy, wheat, paper, packaging and glass have all fallen in price – a series of new threats to global commodity markets is emerging to stoke renewed fears of price hikes.

India’s new crackdown on (non-basmati) rice exports is now adding pressure to an already volatile grains market. As the world’s largest rice exporter (accounting for over 40% of shipments), experts are worried a ban could drive global food inflation and particularly hit African countries, which are heavily reliant on the grain for both human consumption and animal feed.

In the same week Russian president Vladimir Putin withdrew from the UN-brokered Black Sea pact designed to safely move cereals and other agricultural goods from the war-torn region to the rest of the world. Almost 33 million metric tonnes of grains were exported under the deal, which supported price stability and prevented shortages of goods like wheat and corn around the world. Putin’s decision is set to send the markets into further frenzy, with stock prices in Europe having already risen more than 12% since last week.

A strain on cereals is also being compounded by the current European heatwave. As we revealed last week, the 2023 European cereal harvest is set to be its lowest since 2007 – some 9.5% down on the five-year 283 million tonne average.

Commodity analysts at Mintec also expect fruit & veg crop yields to be impacted, particularly in Spain where water availability is already limited, while the impact on olive oil production from the scorching heat could be “nothing short of catastrophic” on top of the shortfall in the previous harvest, Filippo Berio has said.

Elsewhere in the world, cocoa production has taken a hit in the Ivory Coast, which accounts for over 40% of global cocoa supply, due to heavy rain and prices are up 23% year-to-date, while sugar prices keep rising, up 42% in the last year. The FAO’s World Food Prices index fell for a second month to 122.3 in June, a fresh low since April 2021. But if July’s events are anything to go by, the road to recovery is still rocky.

And closer to home, of course, alcohol duty is going up from next week, while the new Border Targeting Operating Model is set to add more cost and complexity from October on specialist products, while continued shortages means supermarkets and suppliers are expending extra cash to maintain supply via inshoring and nearshoring. It isn’t getting any easier is it?