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As inflation continues to affect the food supply chain, prices for a variety of products are shooting up. Fortunately, prices of some commodities have dropped, like avocado, coffee, and cooking oil.
The price tags of the mentioned items have spiraled down, although they’re still higher than their usual market price.
Several prices of agriculture commodities, including Indian sunflower oil and palm oil have dropped in recent months. The former dropped by 7% during May and June and the latter 12% during the same period. This is shown from a data by Tridge, an agriculture commodities data group.
The price of avocadoes in Vietnam has gone down 5% this July, when compared with the rates imposed when the war broke out between Russia and Ukraine last February.
Avocado prices have declined as well, with the largest producers of avocado Mexico, Peru, and Colombia announcing that they will be reducing their price.
The price of avocadoes sold wholesale in Mexico decreased by 27% over the month of June and July. Colombia almost doubled the figure, with a 40% price reduction.
The extreme abundance of Peruvian avocados in recent months has had an impact on the cost and price of avocadoes sold across global markets. Sellers will lower prices as they compete with each other to attract customers who look for cheaper rates.
People fear an impending recession
With inflation on the rise, consumers are starting to cut down their consumption of goods. Though the goods are necessary, some have already decided to cut short on these necessities.
According to a spokesperson at Tridge Minwoo Nam, because of the recent financial crisis, people are afraid that a recession might happen and as such have reduced their food consumption.
“There are multiple factors affecting the market. First of all, global recession fear is dampening the demand outlook,” stated Nam.
“Also because prices went too high, [so] consumers are spending less or looking for substitutes,” Nam added. He said that an example is sunflower oil.
With the recent market turmoil, many traders and investors have started liquidating their hedge funds. But according to Nam, inflation is not yet obvious in the current market even with consumers making adjustment to their consumption.
He further added, “We can say concern for food inflation has somewhat abated, but the prices of many agri-products are still high compared to average years. Contractionary policies are certainly affecting the market.”
The disruption of the supply chain
The supply of food and other products continues to remain low, and this is amid an increase in demand among consumers.
Nam also commended several key efforts from governments and central banks in freezing prices to cope with the volatile market that is subject to factors that have caused great price fluctuations in many parts of world.
“It doesn’t seem likely that food prices suddenly fall into recessionary territory. However, the likelihood of fiercer inflation has decreased,” he said.
The prices for food and agriculture goods continue to be high, but there have been some dips in recent months. The Food Price Index fell three times within a row this June alone, reported the Food and Agriculture Organization of the United Nations. This is an important tracking feature at the organization which monitors global commodity trends on monthly basis.
The price of cereal products, sugar and vegetable oils declined over the past months. However, meat prices increased as did dairy product costs.
The FAO reports that cereal prices continue their downward trend. This June saw a big decline, more than it did in May. However, the drop is lower than the same period last year at 48.5%.
The news of Russia and Ukraine resuming grain exports over the Black Sea has caused a lighter mood among traders and market participants.
The price increase in Asia is slight but not record high, according to Nomura’s Chief Economist Sonal Varma.
Further, Varma said that in the second half of this year, prices are likely to surge in many countries throughout Asia including the Philippines India, Singapore, and South Korea.
Opinions expressed by US Insider contributors are their own.