Inflation Penetrates Daily Life... Changing the Way We Eat

Consecutive Adversities from COVID-19 to the Ukraine War
Concerns over 'Demand Destruction' as Consumers Give Up or Reduce Spending Due to Rising Prices

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Hyun-jung] Raju Sahu, who used to sell fried dumplings and rice cakes along the roadside in Odisha, eastern India, started steaming food instead of frying as oil prices soared sharply. He said, "I make about 300 to 400 dumplings a day, and by increasing steamed food sales, I reduced palm oil purchases to 15kg, half of what I used to buy."

The Bakery Employers Association of C?te d'Ivoire, unable to withstand rising wheat prices, is advocating for reducing the legally fixed weight of baguettes. In a statement last week, the association proposed lowering the standard weight of baguettes from the currently approved 200g to 150g.

Following the spread of COVID-19 and the outbreak of war due to Russia's invasion of Ukraine, global raw material prices have surged, impacting daily life. Bloomberg reported on the 28th (local time) that the rise in prices of basic foods such as bread, meat, and cooking oil is shocking commodity markets and the global food system.

Julian Conway McGrill, Southeast Asia representative of consulting firm LMC International, explained, "Consumers with empty pantries have to reduce their intake." He expressed concerns about so-called 'demand destruction,' where consumers give up or reduce purchases because prices cannot be lowered immediately. McGrill emphasized, "Sub-Saharan Africa and South Asia face the possibility of deepening poverty," adding, "As companies start reducing oil usage or product sizes, demand destruction could intensify."

A representative item is vegetable oil. Russia's invasion of Ukraine disrupted global grain trade and drove the prices of the most common cooking oils, palm oil and soybeans, to record highs.

The shortage of cooking oil had already been worsening since last year. Malaysia, the world's second-largest palm oil producer, saw production decline due to chronic labor shortages; Canada experienced reduced canola harvests; and Brazil and Argentina saw decreased soybean yields. Buyers hoped to rely on sunflower oil from Ukraine and Russia, which account for about 75% of global exports, but the war between the two countries shattered those expectations.

[Image source=Reuters Yonhap News]

The rise in comparative prices is also expected to fuel food price increases. Farmers are reducing fertilizer use, which will lead to lower yields.

The report predicted that not only crops but also rising meat prices will affect restaurants. It shared the situation of Joe Fontana, who owns five branches of the spicy chicken restaurant 'Fry Coop' in Chicago and its suburbs. He lamented that chicken prices rose after meatpacking plants closed two years ago due to the pandemic, and that feed costs have further increased due to drought in Brazil and the Ukraine war, pushing ingredient prices even higher.

He said, "Overall costs have nearly doubled since January last year," adding, "Beef suet in 50-pound cubes was $29 for years, but now it has risen to $56." Fontana said, "I have already raised chicken sandwich prices several times to $10, and everyone says it's expensive," adding, "My fear is that I will have to raise sandwich prices to $15."

This content was produced with the assistance of AI translation services.