However, world cereal production is on its way to reach a new record.
Reasons for this inflation
Revived demand in some countries.
A backlog of low production
Market and supply disruptions due to restrictions on movement due to COVID-19
Impact of the inflation
Higher inflation will affect poor countries dependent on imports.
Huge Multi-National Companies such as Nestlé and Coca-Cola could pass on increased prices of their raw materials to consumers.
What is inflation?
It measures the average price change in a basket of commodities and services over time.
However, a certain level of inflation is required in the economy to ensure that expenditure is promoted and hoarding money through savings is demotivated.
Important value additions
FPI is released by Food and Agriculture Organisation
It is a measure of the monthly change in international prices of a basket of food commodities.
It consists of the average of five commodity group price indices- cereals, oilseeds, dairy products, meat and sugar.
It is weighted with the average export shares of each of the groups
