Understanding food price inflation and what can be done about it

With large falls in maize output on account of El Niño-related drought conditions and increases in maize imports, South Africans can expect continued high food price inflation in the coming months.

Africa Food Security 11 via Wikimedia Commons

Inflation always has a lacerating effect on low-income earners' ability to protect their income and make the most of the little money they have, but it is getting more difficult for the poor to make ends meet. While inflation's effects are felt throughout the economy its distribution across different income groups as a phenomenon and its causes are often poorly understood.

The question of inflation has a very different meaning in the minds of economists and what ordinary citizens feel and come to understand about its causes and nature. The recent food price hikes is a good example and perhaps also a puzzle, given that oil prices are back to historical lows.

So, why are food prices rising and why are they higher in rural areas given that food is produced in rural areas? What explains this paradox? Inflation is not always tameable through monetary policy as pricing can be a product of external effects beyond the control of governments like the...

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