Weather, transportation, trade will test inflation in 2023 –

“2022 was, of course, a really, really unusual year for food prices”​ with inflation driving up the cost of food about 11% over 2021, according to the Consumer Price Index, which is “historically speaking … a really wild number,”​ Ricky Volpe, an associate professor of agribusiness at Cal Poly, said during a recent briefing on the real drivers of food prices hosted by FMI – The Food Industry Association.

“But,”​ he added, “since the summer, inflation really has cooled down a lot, and some food prices have actually come down.”

‘Weather is probably the single biggest question mark about what is coming in 2023’

While he acknowledged this is “good news,” he also warned that “weather is probably the single biggest question mark about what is coming in 2023,”​ and if severe weather events continue to intensify as expected it will impact the supply chain by limiting transportation and commodity production and by extension exports and imports.

“A lot of analysts are predicting severe weather events in 2023 will continue to affect both major exporters and US producers and manufacturers and will likely continue to have outsized impacts. Droughts, floods, hurricanes, fires, probably something we don’t even see coming right now could impact the supply chain going forward”​ and potentially cause “inflation to spike back up,”​ FMI’s vice president of tax, trade, and sustainability Andy Harig agreed during the webinar.

For example, he pointed to the drought along the Mississippi that is causing a “major, major slowdown in barge traffic, which is critical to hauling grain and other crops South both to the Gulf of Mexico and then west to California for export.”


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