According to the U.S. Drought Monitor, more than 95 percent of the U.S. West is in drought, the largest area ever recorded.
HONG KONG, Aug. 3 (Xinhua) -- The devastating drought blanketing the western United States has serious implications for food availability and prices, threatening the global recovery from the COVID-19 pandemic, the South China Morning Post reported Monday.
According to the U.S. Drought Monitor, more than 95 percent of the U.S. West is in drought, the largest area ever recorded. "Hot and arid conditions are set to exacerbate the threat of wildfires and water shortages this summer," the article said.
Noting that the affected region accounts for about a third of U.S. agricultural output and the Federal Reserve is expected to continue to provide monetary stimulus until the economy has fully recovered, the article said, "The tight food supply and ultra-easy monetary policy have added more worry about rising prices for the commodity market."
Data released in July showed that wholesale prices were also soaring, with the producer price index rising by 7.3 percent in the 12 months that ended in June, the highest since the U.S. Labor Department began measuring the index in 2010.
In turn, higher U.S. interest rates could result in a sharp tightening of global financial conditions and large capital outflows from emerging and developing economies, the article said.
Many also fear that supply shortages caused by the drought and the Federal Reserve's quantitative easing policy will push global commodity prices higher sharply, rendering a global recovery more difficult, it added.