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What factors could lead to a rise in grocery prices?

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Quick Answer

Some factors that lead to increased grocery prices include high prices for oil and the subsidization of crops such as corn. Another factor that can lead to increased food prices is drought, which creates a higher demand for food.

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What factors could lead to a rise in grocery prices?
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Full Answer

Because corn is subsidized for fuel production instead of consumption, it gets taken out of the food supply and increases the price of available corn. The relationship between the cost of oil and the cost of food is close, because most food must travel hundreds of miles before it reaches a food distributor or grocery store.

One of the biggest factors responsible for a rise in the price of food is the fact that more people around the world are becoming affluent, which leads them to demand a better diet, in turn increasing demand for food. Another factor that can lead to increased food prices is a lack of workers. When farms face labor shortages, they cannot produce as much yield in their crops, making prices rise.

A lack of competition in the marketplace also leads to higher food prices. When big agricultural firms buy each other out, this decreases the amount of competition, leaving no incentive to lower the price of food.

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