Your Food Costs Are About to Soar. Here's Why

It's not just a matter of inflation.

These days, many consumers are racking up sky-high tabs on their credit cards just to put food on the table. In September, the Consumer Price Index, which measures changes in the cost of consumer goods, indicated that food costs were up 11.2% from the previous year. And that's putting a lot of people in a tough financial spot, since food is one of the hardest expenses to cut back on.

But while we can easily point to inflation as the reason food prices are up today, the unfortunate reality is that they're likely to increase in the future for one big reason having nothing to do with inflation. And it's something consumers will need to prepare for.

Climate change could end up being costly

The cost of food, like other commodities, can change based on how readily available it is. The basic laws of supply and demand tell us that when a given item is available in enough quantities for consumers to buy what they need, its price tends to hold steady. When supply exceeds demand, prices can drop. And when demand exceeds supply, prices can rise.

The latter scenario is likely to apply to the food industry in the near future due to one major factor -- climate change. In recent years, extreme weather events like floods, droughts, and heatwaves have become more commonplace. But these events have the potential to seriously disrupt food chains.

Imagine a large section of farmland across the U.S. is battered by drought conditions in a given year. That could result in much lower output than usual, thereby driving the cost of food upward.

To be clear, this isn't just a domestic problem. Extreme weather has the potential to impact the supply of food on a global level.

A 2019 report by the Global Commission on Adaptation revealed that climate change has the potential to slow global agriculture output by 5% to 30% by 2050. The latter is a pretty scary number. And while some cities and countries are taking steps to address the problem of climate change by introducing laws aimed at reducing emissions, many experts agree that not enough is being done.

Prepare for food costs to go up

The hope is that the recent bout of rampant inflation consumers have been dealing with will come to an end at some point. It probably won't happen overnight, but as supply chains catch up to consumer demand and the Federal Reserve makes borrowing more expensive through continuing interest rate hikes, we could see the general cost of living start to drop in the course of the new year.

But that doesn't mean food costs will shrink in the new year. And over time, the cost of feeding yourself and your family might rise. That's something you can prepare for by boosting your savings now, and also, by keeping other large expenses, like housing, as low as possible.

To some degree, climate change may be inevitable. And we all have to face the reality that food supply shortages could make groceries a much larger expense in the future.