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Lockdown sends food prices soaring around the world

posted onMay 26, 2020

As more Indian stayed home because of COVID-19, food prices surged by as much as 20% in the first four weeks since the government announced a national lockdown on March 24. 

A study by the Mumbai-based Indira Gandhi Institute of Development Research (IGIDR) mapped publicly available data for wholesale and retail prices for 22 commodities from 114 cities across the country. It found that average price increases were to the tune of over 6% for several pulses, over 3.5% for most edible oils, 15% for potatoes and 28% for tomatoes.

It also found that smaller cities saw a much higher increase in prices with at least a few cities seeing a rise in retail food prices by as much as 20%. A survey of 50 food retailers in 14 cities revealed serious operational challenges associated with sourcing supplies, transportation and police harassment. 

“Although, in principle, the lockdown allowed free movement in essential commodities and was supposed to allow food markets to function without impediments, in reality, those involved in food supply faced insurmountable challenges, including intermittent closure of wholesale markets for agricultural produce and restrictions and disruption on movement of vehicles, both across state borders and within cities” the paper stated. 

Macroeconomists focus on the prospect of recessionary trends that will depress prices in general, but the IGIDR analysis suggests: “It may well be that food prices will increase first before they go down.” 

And it's not just India. The trend of rising food costs is playing out across the world.

In Spain, fruit & vegetable prices have soared since the country’s lockdown started with some products doubling, if not tripling in price, according to a report in Malaga Hoy. 

And in the world's largest economy, here's a sampling of items that increased the most in April, according to USA Today:

Apples: 4.9%
Bread 3.7%
Cookies 5.1%
Fresh sweet rolls, coffeecakes, doughnuts: 5%
Hot dogs: 5.7%
Pork chops: 7.4%
Poultry: 5.8%

Experts worry that the longer the coronavirus crisis lasts, the bigger the food problem will become — creating a perilous cycle of uncertainty, supply, demand and —  eventually — hunger. 
The United Nations warns that the pandemic could push 130 million people to “the edge of starvation.”  
In the words of David Beasley, executive director of the World Food Program, the spread of the coronavirus has sparked “the worst humanitarian crisis since World War II."