Inflation Is Cooling. Food Inflation Could Get Worse.

livemint.com:

World Trade Organization estimates that as of mid-July, 45 of the 104 restrictions on exports of food, feed and fertilizer that were introduced in the months after the invasion of Ukraine had been removed. It estimates that the remaining bans cover $24.5 billion of traded goods. “We must take care to avoid vicious circles of supply availability concerns leading to more export restrictions and higher prices," said Ngozi Okonjo-Iweala, the WTO’s director-general.

One additional risk to food supply is the strong natural warming condition in the Pacific Ocean known as El Niño, which can lead to changes in weather patterns and reduced harvests of some crops. The Australian government’s Bureau of Meteorology has issued an El Niño alert, saying there is a 70% chance that the climate pattern will emerge later this year. While some governments are resorting to export bans to try to keep prices down, European policy makers have been investigating whether food producers and retailers have taken advantage of the pickup in inflation to boost their profits.

In the U.K., a review of grocery stores by the Competition and Markets Authority last month found that they were not boosting profit margins, but it has now turned its attention to supply chains for a number of products, including bread, poultry, milk and mayonnaise. The French government has asked food producers to identify a range of products for which prices will be frozen or cut over coming months. Despite fresh worries, central bankers do expect food prices to rise more slowly.

But they are also aware that it has taken much longer for that to happen than they had anticipated. “Food price inflation will go on declining," the BOE’s Bailey said. “But it’s taken longer than many