News
A new administration’s influence over food prices likely limited
An ag economist says the next president will likely have little impact on food price inflation despite campaign promises.
American Enterprise Institute Director of Agricultural Policy Studies Vince Smith tells Brownfield, “It’s simply not the case that food is way more expensive relative to other commodities today.”
He says food prices since the beginning of 2020 have gone up slightly more than the overall rate of inflation, calling it, “a negligible difference on average over that four-year period.”
He says food prices have been reacting to several supply chain shocks including the pandemic and avian influenza.
What has increased Smith says has been hourly wages to workers in the food sector and the cost of energy following the war in Ukraine.
“If you want to reduce inflation, you do exactly what the Fed has been doing over the last two years which has been to create relatively tight financial conditions,” he explains. “They’ve raised interest rates and have tended to slow down the monetary pressures on higher prices.”
Smith points out most household incomes have increased over the past four years to keep pace with rising costs but those with fixed incomes and below the poverty line have been disproportionately affected.
He says climate challenges, not politicians, will likely be the largest factor impacting food costs moving forward given there aren’t additional supply chain disruptions.
