The last few years have been incredibly tough for consumers of all stripes. Since the onset of the Covid-19 pandemic, prices have risen significantly.

At first, disruptions in the supply chain were felt, followed by an energy crisis. And on the food side, soaring fertilizer prices and natural disasters have played a significant role.

Although countries seem to have addressed the first three negative factors, the last one is gaining momentum. According to scientists, climate change is the cause of it.

The latest unpleasant surprise has come from Russia's frosts, which have destroyed cereal, legume, oilseed, and grain crops.

And why does it matter?

If it were a problem unique to Russia, it would not be so severe, but in reality, it could affect the whole world. After all, the country is still the world's leading wheat exporter.

So it's no wonder that wheat futures for July delivery experienced a 3.54% rise on May 10, reaching $6.6 per bushel, the highest level since August 2023.

On top of that, a rainy spring has hit northwestern Europe. Excess moisture could affect the quality of winter crops, determining whether the wheat ends up for human or animal consumption.

Finally, the hot, dry summer in parts of Australia dried out the soil during the planting season, while in the U.S., drought has affected much of the winter wheat-growing regions.

What are the consequences?

Although the downward trend in wheat supply has been in place for some time, unfavorable conditions could exacerbate the situation. In 2020, supply amounted to almost 300 million tons, falling to 271 million tons last year.

Analysts forecast a further decline to 257 million tons for each of the years 2024-2025. The main culprits? Unfavorable weather conditions and geopolitical tensions. The latter has not only sparked a surge in food prices but has also significantly impacted the prices of commodities such as oil, gas, gold (XAUUSD), and silver (XAGUSD).

Any prolonged rise in wheat prices could push up bread and pasta costs, intensifying inflationary pressure on central banks.

As for how bad the situation will be this year, only time will tell. It is worth noting that the harvest season will begin in the northern hemisphere in about four weeks.

What lies ahead?

The current year may see record prices for major food commodities, which could trigger a new wave of global inflation. And with each passing day, the signs are becoming more evident.

In addition to wheat, robusta coffee prices have soared to their highest level in 45 years due to poor harvests in Vietnam, the world's largest producer of this variety.

To make matters worse, cocoa prices remain three times higher than a year ago. Cocoa supply is expected to fall short of demand by 8.5% of world production.

In summary, although inflation is gradually approaching central bank targets, it is premature to declare victory on high prices. There are still too many variables at play.