Though inflation may be cooling, grocery bills are still eating away at everyone’s budgets, thanks to skyrocketing food prices. Global food prices reached an 18-month high in October as weather woes and supply constraints sparked fresh inflation concerns. The UN Food and Agriculture Organization’s latest data shows food commodity costs jumped to 127.4 points in October, a 5.5% increase from the previous year.

• Vegetable oil prices led the surge with a 7.3% monthly gain, while sugar and dairy products rose 2.6% and 1.9%, respectively.
• Higher commodity costs may worsen the impact on consumers as these increases are passed along the supply chain, marking G7 nations’ first food inflation rise in two years.

Storm clouds gathering: T. Rowe Price’s Tomasz Wieladek warns that food price pressures pose “a significant challenge for central banks” just as they were hoping to cut rates. FAO economist Monika Tothova notes that markets are particularly vulnerable, saying, “Any shock — be it weather-related, a change in trade policy, or other factors — could exacerbate the situation in already tight markets.” With US consumer inflation expectations for the year ahead climbing to 5.3% in October, largely due to food and services costs, the Fed’s path to its 2% target just got a lot more complicated.