Authored by Simon White, Bloomberg macro strategist,

Food prices are unlikely to be a driver of higher inflation in the coming months. 

Nonetheless, this will not be enough countervail mounting inflation pressures elsewhere.

Indeed, there are rising signs of a global cyclical upturn, driven by China, that may cause inflation to plateau and begin rising again sooner than the market is currently pricing.

We have seen an uptick in the prices of agricultural and food prices, but this should not detract from the broader expected trend lower in US food prices.

The chart below shows fertilizer-price growth has fallen sharply, and this anticipates that food CPI should follow suit.

However, food is only ~14% of headline CPI in the US, and so this alone is not enough to guarantee the current disinflationary trend continues for as long as the market expects.