Agflation

AAA

DEFINITION of 'Agflation'

An increase in the price of food that occurs as a result of increased demand from human consumption and use as an alternative energy resource. While the competitive nature of retail supermarkets allows some of the effects of agflation to be absorbed, the price increases that agflation causes are largely passed on to the end consumer. The term is derived from a combination of the words "agriculture" and "inflation".

INVESTOPEDIA EXPLAINS 'Agflation'

Interest in alternative energies contributes to agflation. In order to produce biofuel (such as biodiesel and ethanol), manufacturers need to use food products such soybeans and corn. This creates more demand for these products, which causes their prices to increase.

Unfortunately, these price increases spread to other non-fuel related grains (such as rice and wheat) as consumers switch to less expensive substitutes for consumption. Furthermore, agflation will also affect non-vegetative foods (eggs, meat and dairy) as the price increases for grain will make livestock feed more expensive as well.

RELATED TERMS
  1. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise ...
  3. Inflation

    The rate at which the general level of prices for goods and services ...
  4. Investment Farm

    An agricultural business operation that is purchased and operated ...
  5. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
  6. Microeconomics

    The branch of economics that analyzes the market behavior of ...
Related Articles
  1. Curbing The Effects Of Inflation
    Bonds & Fixed Income

    Curbing The Effects Of Inflation

  2. What You Should Know About Inflation
    Economics

    What You Should Know About Inflation

  3. There Are More Ways To Invest In Land ...
    Investing

    There Are More Ways To Invest In Land ...

  4. Why Is Monsanto Evil, But DuPont Isn't?
    Investing News

    Why Is Monsanto Evil, But DuPont Isn't?

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center