Economists warn against global price hikes, saying that consumers all over the globe should get used to high prices of commodities, especially food. However, this wave of price hikes is temporary, one economist told the Egyptian Mail.
“The unstable prices of global food prices are driven by oil prices, supply and demand, climate change and the [Covid] pandemic,” Rashad Abdo, an economist and president of the Egyptian Forum for Economic and Strategic Studies, told the Egyptian Mail.
The economist argued that an increase in oil prices, over the past few weeks due to the Covid-19 pandemic, has pushed up the cost of food production and transportation.
Global food prices have up to nearly 33 per cent in September this year, compared to the same period last year, according to the UN Food and Agriculture Organisation (FAO)’s monthly Food Price Index.
The monthly index is set to measure the outcome of prices changes in a number of food commodities, such as vegetable oil, meat, poultry, fish and wheat.
World prices have soared by more than three per cent since July, its highest rise since 2011. As consumers look at the nominal prices at markets only, economists have a different perception of prices as a reflection of inflation.
Moreover, the pandemic has limisted the flow of farming workers to grow, harvest, and process and distribute food commodities.
The United Nations Conference on Trade and Development (UNCTAD) has revealed that prices of raw materials shot up by 43.5 per cent this year. However, prices fell in 2020 by 18 per cent because of the pandemic.
“Egyptian consumers suffer a lot from the rise of global commodities’ price hikes due to high demand for imported commodities, especially from China,” Abdo said.
China is facing a serious shortage of electricity since late September which has left millions of businesses hit by power cuts. It globally affects the supply chains, especially ahead of end-of-the-year shopping season.
“As the world starts to reopen after the pandemic, demand for Chinese goods is surging and the factories making them need a lot more power,” Abdo said.
The economist believes that the recent wave of price hikes is casual, forecasting that prices will be back to normal soon with the recovery of oil prices and after China solves its power shortage.
Abdo added that the price hikes are a global phenomenon, urging the government to call on the commercial chambers and importers to lower their profit margins to ease the burden of on the local consumers.
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