Rice prices boil over, stirring inflation concerns for Asian central banks
Central banks across Asia are bracing themselves for the challenge of curbing inflation amid soaring food prices, particularly rice, a dietary staple in the region. The cost of rice surged to its highest since 2008, sparking concern among economists at HSBC Holdings Plc.
Frederic Neumann, leading a team of economists at HSBC, referred to the significant impact of the 2008 food price scare in a research note published on Friday. During that time, escalating rice prices quickly influenced other markets as consumer demand soared and governments rushed to ensure sufficient supply. The situation also boosted the prices of other staple foods like wheat, as consumers sought alternatives.
Thailand, a key global exporter, has seen its rice export prices rocket to over US$600 (21,480 baht) per tonne, marking a near 50% increase year-on-year. This presents a serious concern for policymakers.
Neumann said that unlike other harvests such as tomatoes and onions which typically stabilise post-spike due to shorter harvest cycles, rice prices can remain high for extended periods.
Over the last quarter of a century, global rice imports as a percentage of consumption have approximately doubled and have risen by about four percentage points since the 2008 food price scare, the research note highlighted. This indicates that disruptions in one economy could significantly impact others, a risk that has grown over time, argued Neumann.
Adverse weather conditions, including inconsistent rainfall and droughts, are impacting crops worldwide, restricting supply and pushing up prices. India, the world’s leading rice exporter, has implemented restrictions on foreign shipments to stabilise local prices, further tightening global supplies, reported Bangkok Post.
Asian economies heavily dependent on rice imports include Malaysia and the Philippines, followed by Korea and Taiwan, according to Neumann. Other regions like Indonesia are also at risk. Hong Kong and Singapore import all their rice, but their purchasing power enables them to ensure steady supplies. Neumann advised to “Go easy on the curry.”
In related news, rice prices skyrocketed in Thailand due to the drought effect and export ban. It also threatened farmers in Thailand as well and you can read more about it here.
