Why Food Prices May Be Peaking
- Media Manager
- Jul 5, 2022
- 1 min read
Morgan Stanley - Research
Published: July 6th, 2022
Photo Credit: Unsplash/CC0 Public Domain
Though inflation is still running high, Morgan Stanley Research thinks food prices—up 65% globally in the last two years—will peak this year and begin to drop in 2023. Here’s why.
The effects of rising food prices have rippled through the economy, from governments imposing price controls and trade restrictions to consumers cutting back in other areas as they spend more money on groceries.
In addition to taking a bite out of discretionary spending, increasing food costs have pushed inflation higher and pose a serious risk to global economic recovery. This is especially true in emerging markets, where food represents a large share of overall consumer spending.
The increases are a result of supply constraints driven by difficult-to-predict variables— high energy prices, geopolitics and weather—but analysts with Morgan Stanley Research are forecasting that food prices will peak in 2022 and start falling in 2023.
“While we recognize investor concerns that food prices may escalate further, we believe the market is underappreciating the factors that will cause future food price increases to moderate,” says Morgan Stanley Equity Analyst Roberto Browne.
Among those factors, he notes, are an expected increased output by farmers, weather normalization and the potential for easing of tensions between Russia and Ukraine.
