Food inflation is a type of inflation that affects food items. It often the most noticeable form of inflation, and tends to impact lower income individuals the hardest. Common causes include poor harvest, war, increasing energy prices, and food being unharvested. Food inflation almost always leads to currency inflation, as food is a requirement for survival.[2][3][4]
The most common policy to counter-measure to food inflation is subsidies and price controls. During times of crisis, such as war or famine governments often implement a system of food rationing. Food stamps, or a food aid to lower income individuals also helps alleviate food inflation. Maintaining a varied agricultural industry can help mitigate the effects of food inflation on a single crop. In the case of artificial food inflation laws or litigation can be used against corporations that practice predatory pricing, monopoly pricing or price gouging. Lower income individuals have lower savings and tend to spend more of their income on basic necessities, resulting in food inflation disproportionally effecting those who are lower income.[6][7][8]
Food inflation encompasses, and expands beyond into agricultural inflation, and usually effects specific foods more so then others. Particular foods that are hit by food inflation are luxury foods such as truffles.[9][10][11]
Although luxury or niche foods are the most susceptible to food inflation, they tend to have minor effects on the population. Food inflation on staple foods, such as wheat, rice or corn are rarer, but its effects tend to be devastating. Generally most countries try to avoid food inflation on staple foods at all cost, such as by subsiding bread. Areas that have high food inflation on stable foods tend to be in periods of high instability, or have an incredibly poor harvest.[12]
Food inflation on stable foods can occur from disease, especially when the biodiversity of the crop is low. As with low genetic diversity, one disease can wipe out entire fields. Generally stable foods are plants, as meats usually are fed using edible plants, and are typically more expensive. Exceptions including fishing and herding in regions where the plants are inedible to humans, such as in Mongolia (sheep), the Sioux (bison), and the Sami people, (reindeer). In developed nations, meat may also be a staple food owing to greater wealth.[13][14][3]
Causes
Causes include climate change, instability, poor harvest, and high energy cost. It can be induced by crop disease such as the great Irish famine which was caused by a monoculture of planting a single species of potato, the Irish Lumper. When Phytophthora infestans (potato blight) spread to Ireland, the low genetic diversity of the crop resulted in the majority of the crop dying, resulting in exponentially high food inflation, the subsequent inaction and exploitation by British officials caused a famine.[15][16] Other times food inflation can be caused by intentional price gouging in which usually large corporations control an artificially high price for the cost of food, often this is done first through predatory pricing in which the cost of food items are set below market value at which point competition is driven out and artificially high prices become standard.[17][18]
Effects
Those most affected by food inflation tend to be lower income individuals, who spend more money on basic necessities. As food prices increase, most purchases by the lower class stop to maintain basic needs, which in turn leads to economic slowdown. Generally high income individuals are not as affected by food inflation, as these individuals tend to have large savings, can afford basic foods, and spend less of their income on food. Food affordability is associated with increased stress, and impacting a person's quality of life.[19]
Food is considered by almost all countries on earth to be a human right, and giving food aid, or subsidized food lower income individuals helps mitigate one of the main groups affected by food inflation. During times of international crisis, food inflation can result in famine, under these circumstance many poor countries rely on humanitarian aid.[20]
COVID-19 pandemic
During the COVID-19 pandemic food prices rose dramatically. In the United States average food prices rose 25% from 2019 to 2023.[21]Food demand also rose dramatically, across the world over the same period.[22] The price of eggs in the United States grew dramatically in 2024 and 2025, due to outbreaks of bird flu.[23]
↑Ismaya, Bambang Indra; Anugrah, Donni Fajar (3 September 2018). "Determinant of Food Inflation". Bulletin of Monetary Economics and Banking. 21 (1): 81–94. doi:10.21098/bemp.v21i1.926. The level of transmission of international prices to domestic prices depends on a country's dependence on imports of food items and the inputs used in agricultural production. In this case, dependency Indonesia on food import is relatively low. It is because most of food- demand could be fulfilled by domestic production and only a few commodities have a high dependency to import (such as garlic and beef meat).
↑"Food Decreases". fastercapital.com. Price elasticity varies for different food categories: The price elasticity of demand for food varies depending on the category of food. For example, the demand for staple foods such as rice and wheat is relatively inelastic as people need these foods to survive. On the other hand, the demand for luxury foods such as caviar and truffles is highly elastic as people can easily substitute these foods with cheaper alternatives.
↑Funk, Michael; Jaag, Christian (June 2018). "The More Economic Approach to Predatory Pricing". Journal of Competition Law & Economics. 14 (2): 292–310. doi:10.1093/joclec/nhy008.
↑Laborde Debucquet, David; Hernandez, Manuel A.; Glauber, Joseph W.; Vos, Rob (2022). "COVID-19 and food inflation scares". In Swinnen, Johan; McDermott, John (eds.). COVID-19 and global food security: Two years later. International Food Policy Research Institute. pp.64–72. doi:10.2499/9780896294226_10. hdl:10568/141416. ISBN978-0-89629-422-6.
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