The Day at a Glance | January 6 2022

The Top

*Food prices at a global level became more moderate in December (-0.9%), although they logged a 28% increase in 2021.

*Shimao Group Holdings Ltd. defaults on local bond payments and upholds concerns about the Chinese real-estate sector`s situation.

*Members of the FED are willing to act more quickly concerning the withdrawal of stimuli in order to contain inflationary risks, according to the most recent meeting minutes.

*Regional indicators in Germany suggest that the rise in inflation hast not been stopped (5.2%e. y/y Dec.).

*New COVID-19 cases in Mexico are quickly increasing; 20,626 new cases were logged yesterday.

Economic environment

Food prices. According to a United Nations index, food prices at a global level became more moderate during December by logging a (-) 0.9% decrease during the month. Nevertheless, the index made by the FAO logged a 28% increase in 2021, and prices remain at their highest levels since 2021. The rise in prices has been caused by complications in farming, high transportation costs, and labor and fertilizer scarcity. This has contributed to higher inflation at a global level. According to the United Nation`s Food and Agriculture Organization`s (FAO) chief economist, Abdolreza Abbassian, it’s unlikely that prices will stabilize or decrease in the short term, despite what was seen in December. All the factors that have led to an increase in prices are still in place at the start of 2022, he assured. According to a report by Bloomberg, the “La Niña” phenomenon could affect the farming process of various foods, as droughts in Brazil and Argentina could reduce soy and corn production; or intense rains in Malaysia and Australia, with negative impacts on palm oil and wheat production. Additionally, the scarcity of fertilizers, which has been caused by high energy prices, has led many grain producers to shift towards the production of grains that require less of said input. The increase in food prices has brought inflation and social unrest to some countries, which las led some governments such as the Ukraine, Russia and Argentina to establish price control policies.