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Will Food Prices Paid by Households Slow Down?

15 mins.
04 JULY, 2023
Leopoldo Torralba
Pedro Larrasquitu
Macro Global Monetary Policy Commodities Spain Global US AER Global AER Personal Food
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To anticipate the normalisation of inflation experienced by households, it is essential to consider the accelerated GDP growth driven by improved purchasing power and declining interest rates. The impact of food inflation is significant, particularly in Europe and, to some extent, in the US. Therefore, gaining a thorough understanding of it is crucial. In this report, we thoroughly examine the trajectory of food prices and the factors influencing them, such as agricultural commodities and energy. We analyse the expected trends and the time lag between the decline in agricultural commodity costs and the resulting food inflation households ultimately bear. We also estimate when this inflationary pressure will likely return to normal.

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