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New fuels, rising prices of new inflationary foods have caused consumers in some parts of the world to suffer. If this trend were to converge with some factors, then it would force consumers to reduce other consumption, or push the central bank to raise interest rates to cope with inflation, which may lead to a slowdown in global economic growth.
One of the main reasons for rising food prices is the new demand for biofuels and ethanol. Biofuels and ethanol can be obtained from corn, palm oil, sugar and other crops. This demand has pushed up the prices of those goods and led to high prices for everything from beef to eggs to soft drinks. In the past few years of global economic growth, food consumption has also risen and inflationary pressures have spread.
Economists believe that this year's US food prices will rise much faster than the overall inflation rate.
Some economists believe that the recent expanding demand for corn may not cause the global economy to face serious tensions. They think that after a period of time, the price will come down again.
So far, the rise in food prices has not yet caused large-scale global inflation. Compared with historical levels, global inflation remains relatively low and stable.
Concerns that Central Banks Cannot Avoid The Swiss Bank researchers pointed out that because of the large amount of farmland occupied by factories and business districts, China's average food prices have grown faster than the earlier five years. At the same time, the continued increase in income has also caused Chinese and other people to spend less on food, which has also increased food prices. After several years of strong growth in the world economy, global food inventories are now at the lowest level in 30 years.
All this has also made the central bank of the world feel intractable. Since the 1970s, although they are facing the pressure of soaring energy prices, most of them do not need to cope with the long-term rise in food prices. From now on, inflation caused by rising food prices will continue to plague national central banks.
However, if food prices continue to rise, banks may be forced to increase interest rates. In order to deal with the inflation of food prices, India used several strategies to raise interest rates.
But since the 1970s, the Federal Reserve Board and other central banks have begun to believe that in the face of temporary food and energy price increases, they can avoid adopting measures to raise interest rates, provided that they have sufficient capacity to prevent such price increases. Spread to other economic fields.
The skyrocketing prices of agricultural products are driving food price increases worldwide, and this is largely driven by the demand for biofuels. It adds yet another new source of inflationary pressure.