Causes of food inflation in North America: COVID-19 and the Russia-Ukraine war
Food inflation in North America reached its peak in 2022, mainly driven by two factors: COVID-19 and Russia’s invasion of Ukraine. COVID-19 disrupted the global supply chain, and triggered labour shortages; consequently, governments in all three North American countries adopted fiscal and monetary policies to offset the impact of the pandemic, mostly by providing direct assistance to businesses and households and by lowering interest rates. The invasion of Ukraine, a major exporter of grain and vegetable oil, increased commodity prices and contributed to higher food prices. Overall, food inflation in the U.S. varies according to both sector and timeframe. In response to the Russian invasion, cereal product prices in the U.S. have increased, whereas meat prices spiked during the COVID-19 pandemic. This study focuses on determining the key factors that have led to higher food inflation in North America, and more specifically the United States. We have found that the unemployment rate, an index of global supply chain pressures, and COVID-19 related aid have directly contributed to U.S. food inflation. Projections from several organisations suggest food inflation will decline in 2023 and 2024.
