It’s impossible to ignore the increase in grocery prices over the last few years.
Food costs remain 30–35% higher than they were before the pandemic. Two-thirds of Americans say they find food prices unaffordable. Groceries rank third among products most commonly bought with “buy now, pay later” services.
This is only the beginning. The wars in Iran and Ukraine are converging with global-warming-fueled freak weather to create an almighty maelstrom of food inflation.
The closure of the Strait of Hormuz will have a protracted impact on next year’s harvests. JP Morgan predicts that food inflation will hit 5% in early 2027—assuming traffic through the Strait returns to normal, which is far from guaranteed. The Persian Gulf is key in the global supply chain for producing fertilizers. In addition, mass-scale commercial greenhouses depend on natural gas for heat, power, and airborne carbon dioxide.
The Ukraine war is having an impact on another key commodity: grain. Thanks to its exceptionally fertile soil, Ukraine has long been known as “the breadbasket of Europe.” But Ukrainian grain exports have decreased by 76% since last August, driving up prices on the world market.
Overall global instability is also increasing freight and insurance costs, which will be reflected in higher prices at the grocery store.
This year’s El Niño will only intensify the inflationary storm. Chaotic weather patterns disrupt crop harvests. Successive droughts, floods, and heat waves hit cornerstone crops like corn, soybeans, sugar, and rice particularly hard.
In the span of six months to a year, a “moderate” El Niño can cause 3% inflation in commodity prices—and this year’s is expected to be “supersized” thanks to global warming. The effects on food prices from El Niño could last two years.
The rising cost of staples will spill over into everything else. Even a small change in the corn supply creates ripples, since it is used as feed for livestock and poultry, and processed into sweeteners, starches, and oils.
The skyrocketing cost of food will not affect everyone equally. Households in the lowest income brackets spend 33% of their yearly income on food, compared to just 6% for the richest households.
It’s no wonder 95% of Americans believe the US is currently suffering an affordability crisis. Consumer sentiment hit a record low back in May, and the 10-year trend has been on a steady decline.
There is only so much the working class will withstand before the dam breaks. Anger is building and searching for an outlet. As millions of Americans feel their stomachs cramp with hunger while bombs are dropped in the Middle East, they will inevitably be pushed into action.
As a Forbes report stated, “Food inflation increasingly needs to be understood as a system. Weather, agriculture, disease, geopolitics, energy, labor, and supply chains no longer behave as isolated variables. Their convergence is what creates volatility.”
The “system” behind this volatility is capitalism in senile decay. Food production and distribution are subject to the unplanned chaos of the free market and competition between nation-states. Crop burning, shooting wars that disrupt grain production and distribution, and erratic trade wars that ruin farmers and consumers alike are all fruits of this irrational system.
Land, water, energy, and supply chains must be managed and planned internationally—an impossibility as long as capitalism remains.