After months of political authorities and central banks trying to rein in sky-high inflation, some countries are starting to see some cost moderation – albeit prices remaining at historically high levels. Meanwhile other nations are beating price records month after month, with each inflation report being the statistical equivalent of a slap on the face.

Consumer price inflation numbers in the US came less hot than expected, showing a 7.7% price increase in the US (when Wall Street was betting for 7.9%), with food prices declining for the second month in a row to reach 10.9% after peaking in August half a percentage point higher.

Similarly, China posted in September a 29-month high 2.8% inflation. However, authorities have heavily intervened in the pork market, by flooding it with its strategic pork reserves. 

Pork disproportionately influences the food basket costs in the country. With the sector intervention, China has managed to drive inflation down to 2.1% and food inflation to 7% – down a significant 1.8% on a monthly basis, according to the National Bureau of Statistics of China. 

On the other side, we have the EU and UK. The bloc’s food prices continue their uptrend, according to the Eurostat food price monitoring tool, with a flash estimate at the end of October putting food, alcohol and tobacco prices at 13.1% compared to 11.8% in September. 

Meanwhile, the UK posted its highest inflation levels in 41 years, at 11.1%, and a 45-year record food inflation of 16.2% – up 1.7% in a single month.

US regains food price control
According to the US Department of Agriculture (USDA) food inflation is going to stabilize between 9.5% to 10.5% at the year’s end.

Most commodities are expected to lower in prices by end 2022, when compared on a year-to-year basis. Including dairy products, fats and oils, fruit and vegetables, sugar and sweets, cereals and bakery and non-alcoholic beverages.

In the US, meat is facing a delayed reality, with disruptions for the sector coming some months after inflation hard-hit other commodities.Meat prices will be the outlier as prices are expected to keep soaring in the following months to reach a yearly 8% to 9% inflation. However, the USDA expects a soft landing of the commodity prices in 2023, with meat prices increasing from 1.5% to 2.5% next year. 

FoodIngredientsFirst talked to Erin Borror, VP of economic analysis, US Meat Export Federation, who revealed that meat is facing a delayed reality, with disruptions for the sector coming some months after inflation hard-hit other commodities.

China puts an end to the cycle
The Chinese pork market, which is pivotal at the time of measuring food and general inflation, has a cyclical nature that is well understood by the domestic authorities.

Chinese leaders already cautioned earlier this year that “cyclical fluctuations” toward upper prices could occur. It is a common practice in the country for farmers to hoard produce just to unleash it when prices accommodate their greedy desires.

With China releasing over 100,000 metric tons of its domestic reserves and hog producers having been warned by authorities to maintain the release of pork or else, prices are set to enter the next phase of the cycle toward lower levels.

In the country, pork prices remain 51.8% higher than last year, leaving space for further food price decreases.

EU displays continental weakness
Of the EU 27 countries, Eurostat reveals that during September, only Denmark, Croatia and the Netherlands posted lower food inflation numbers than during the previous month compared to the 24 other EU countries. Hence, 24 out of the block 27 nations are still dealing with rising inflation.

Some backwinds might come if the Black Sea Grain Initiative is renewed at the end of the week, as Europe has imported, so far, the largest amount of food coming from Ukraine and Russia.

Nonetheless, companies should prepare for years of price fluctuations and unforeseen market disruptions, especially in Europe as energy prices are also driving high food prices.Innova Market Insights has identified “Redefining Value” as its top F&B trend for 2023, as consumers adapt to a global cost-of-living crisis in the face of economic and political volatility.

The global avian flu epidemic will also not help to stabilize poultry prices, as families who opt for turkey, this Christmas will have to face steep costs.

UK, pain ahead
With inflation accelerating rapidly month after month in the country, Brits will have to deal with remarkably rapid prices for many months ahead.

“With the energy price cap rising in October, households found their gas and electricity bills going up again, pushing inflation to a new high. Food prices, particularly for dairy, rose again, driven up by high fertilizer, animal feed and global food costs,” warns Helen Dickinson, chief executive of the British Retail Consortium.

“Many customers are keenly anticipating Black Friday deals and other promotions in the run-up to Christmas, as they prepare to buy gifts and festive treats. Unfortunately, there are few signs the cost of living crisis will abate any time soon,”

Dickinson stresses that urgent government action is needed to prevent even higher inflation in 2023.