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".


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.

  1. Commercial Grain Stock

    The current amount of harvested grain crops stored domestically, ...
  2. Absorbed Cost

    The indirect costs that are associated with manufacturing. Absorbed ...
  3. Biofuel

    Biofuel is a type of energy derived from renewable plant and ...
  4. Financial Supermarket

    A financial supermarket is a financial institution or company ...
  5. Public Elevator

    A grain elevator that, for an associated fee, stores the bulk ...
  6. Alternative Energy ETF

    An exchange-traded fund that invests in companies engaged in ...
Related Articles
  1. Investing

    Debunking Biofuels: Do They Really Raise Food Prices?

    Learn about the two sides of the argument on the effect biofuels have on food prices and about other factors that affect food prices.
  2. Trading

    Spotlight On The Solar Industry

    Before you buy into the hype, learn how the industry works and how to spot the winners.
  3. Insights

    These Companies Are Poised for Growth as Global Population Growth Comes Online

    While there are many concerns about population growth putting pressure on natural resources such as water and energy, these increased demands can spell profits for certain companies that can ...
  4. Investing

    Grow Your Portfolio With Agriculture Funds

    Agriculture commodities can play a complementary role for an investor’s portfolio.
  5. Investing

    I Can't Believe It's Corn!

    The widespread use of corn spans from food additives to fuel, aspirin and windshield washer fluid. Find out where else it's used and the size of this growing industry.
  6. Managing Wealth

    Clean Or Green Technology Investing

    Innovations in energy and consumption grow as companies adopt them to reduce costs.
  7. Insights

    Understanding the Substitution Effect

    The substitution effect is an economic term used to describe consumer behavior relative to price or income changes.
  8. Investing

    What's Next for Whole Foods? (WFM)

    Whole Foods market posted mixed results this quarter and the stock price increased.
  1. What's the difference between the income effect and the substitution effect?

    Learn more about the income effect and substitution effect in economics. Find out how these two principles impact consumer ... Read Answer >>
  2. What countries are driving most of the growth of the food and beverage sector?

    Learn about the countries, primarily emerging market nations, that are currently driving most of the growth in the food and ... Read Answer >>
  3. What emerging markets are best positioned to benefit from growth in the food and ...

    Examine emerging market economies and learn which ones are currently projected to offer the highest growth rates for the ... Read Answer >>
  4. What is the difference between induced consumption and autonomous consumption?

    Explore the difference between autonomous consumption and induced consumption. Simplify the world of economics by understanding ... Read Answer >>
  5. What's the difference between the substitution effect and price effect?

    Learn how the increase in an item's price affects consumer demand. Explore the differences between the substitution and price ... Read Answer >>
  6. What types of expenses are factored into autonomous consumption?

    Examine the principles of autonomous consumption in a zero-income scenario and the differences between induced or discretionary ... Read Answer >>
Hot Definitions
  1. Entrepreneur

    An Entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture. ...
  2. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  3. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  4. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  5. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  6. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
Trading Center