No need to stock up: Singapore guarded against food price increases

Oil prices matter for Asians and their stomachs.

Recent oil supply shocks in Iraq have pulled up oil prices across industries, and is also indirectly driving food inflation via fertilizers and transport costs, to name a few.

A report by UBS indicated that countries with high food weightings in their consumption basket like Indonesia and the Philippines are more likely to be affected while higher-income economies like Singapore, Hong Kong and Korea are less exposed to risk.

Here’s more from the report:

Oil simply makes things very messy when it begins to misbehave. It still isn’t clear if a true oil supply shock is unfolding and hopefully the current rise in prices mainly reflects demand for oil being brought forward as oil consumers take out insurance against a supply disruption. If that disruption fails to materialize then oil prices could conceivably fall back. After all, according to the IEA the global economy is still running with 3.5mn barrels of spare capacity per day.