Navigating Local, Global Dynamics: Pressures on Food Prices

In Mexico and the world, rising inflation in agricultural products, driven by factors like shifting climatic conditions, organized crime and geopolitical conflicts, poses concern on increasing food prices. 

General inflation in Mexico stood at 4.32% during the first half of November, as reported by INEGI. The increase in prices was mainly driven by a surge in energy and agricultural products, with the most significant price hikes observed in electricity, showing a variation of 22.26%, and green tomatoes, experiencing an 18.83% increase.

According to INEGI, during the specified period, general food prices experienced a year-on-year price increase of 6.78%, while the cost of fruits and vegetables rose by 6.02%. Banxico highlighted that it has minimal influence on the performance of food prices, given their volatility and association with external factors such as climatic phenomena, including droughts, frost, and hurricanes.

Furthermore, there has been a surge in the theft of heavy trucks, which also influences food inflation. In 2023, the country witnessed the theft of more than 1,416 heavy trucks, according to industry data. Francisco Castillo, Director, Permafrost, a company specialized in food transportation, noted that in 2022, two of its units were stolen, while this year the figure rose to five. "When a truck is stolen, the loss extends beyond just the product. It includes the entire transport vehicle and the container holding the contents. This incurs a significant cost for the entrepreneur, the retailer, and, ultimately, the consumer. The impact of violence creates a chain of repercussions," he emphasized.

At a global scale, the challenges of rising prices for food commodities persist, and all indications suggest that they will not alleviate in the short term, especially regarding grains and animal-derived products. A report from the World Bank highlights how food inflation is outpacing general inflation in 80% of the world's countries, confirming a troubling trend. The causes of this surge are associated with factors such as climate, especially phenomena like "El Niño," as well as geopolitical conflicts, for which there is little that can be done.

According to the World Bank, corn prices increased by 28% by October of this year, while wheat prices rose by 35%. Rice, a staple food in many countries, experienced a 39% annual increase. According to the report, the most-affected countries are in Africa, North America, Latin America, South Asia, Europe, and Central Asia. Nations like Argentina and Venezuela have recorded triple-digit increases, while others, such as Egypt, Nigeria, and Pakistan, saw double-digit rises, pointed out the organization.