Food Inflation Is a Hardship Outside the Fed's Control
Higher interest rates will do nothing to reverse the surging costs of basics such as meat or eggs. But shoring up the supply chain would help.
Eating has gotten very expensive.
Photographer: Mario Tama/Getty Images
It’s nearly impossible to have a conversation about inflation without mentioning food prices. And no wonder, as they are up 24% since the start of the pandemic and account for one-sixth of the increase in consumer prices overall. After last week’s monetary policy meeting, Federal Reserve Chair Jerome Powell said the central bank is “aware that high inflation imposes significant hardship… especially for those least able to meet the higher costs of essentials like food, housing, and transportation.”
When inflation rates are high, people look to the Fed to bring them back down. But the Fed, even with large increases in interest rates at its disposal, has relatively little influence over the price of necessities such as food because demand is primarily fixed. The remedy for food inflation is a sufficient and reliable supply. Federal and state governments, as well as businesses, have the tools to shore up the food supply chain, not central bankers.