Alberto Cavallo, a Professor of Business Administration at Harvard Business School, explains that the inflation caused by the COVID-19 pandemic is now mostly in the past. According to him, goods inflation has decreased significantly and is back to pre-pandemic levels. The remaining inflation is primarily driven by shelter costs such as rents, which tend to lag behind other economic indicators. This suggests that overall inflation is starting to stabilize, with food prices being less volatile and returning to normal levels after the initial disruptions caused by the pandemic.
In contrast to longer-term causes of inflation related to the COVID-19 pandemic, food prices can fluctuate quickly for short-term reasons. Paul Solman notes that these factors include supply chain disruptions, increased consumer spending during lockdowns, stimulus checks and labor shortages leading to businesses raising prices. However, according to Cavallo, these issues are now mostly resolved.
Cavallo’s findings suggest that while some short-term factors may still affect food prices in the future, the overall trend towards stability should continue. He believes that as long as there are no significant changes in economic conditions or government policies related to food production and distribution, food prices will remain relatively stable in the coming months and years.
