Answer to Question #139303 in Microeconomics for Namrata Karmakar

Question

Find out what other food prices have risen or fallen a lot in recent months and explain why.

How do real food prices (i.e. prices after correcting for inflation) compare today with 10 and 20 years ago? Explain why.

Answer 1

$$Solution$$

In the recent years prices of foods like dairy products, vegetables, fresh fruits, wheat, corn and beef have increased tremendously. This has been entirely because of climate change; which has created adverse weather conditions, like drought. Also, high oil prices have led to transportation of to be very expensive and this translates into the prices of the products skyrocketing.

Thirdly, the WTO limits the amount of subsidized foods that individual countries can add to the global stockpiles.

These high food prices causes a higher Consumer price Index in the countries affected. When food prices are adjusted for inflation it can be noted that food prices are cheaper now compared to 10 or 20 years ago