Global food commodity prices recorded the smallest year-on-year increase in July since the start of 2021, a welcome boost amid global inflationary pressures from the war in Ukraine and pandemic disruptions .
The FAO Food Price Index, compiled by the Food and Agriculture Organization of the United Nations (FAO), climbed 13.1% last month from a year earlier to an average of 140.9. The last time the gauge increased less was a 10.7% increase in January 2021.
While prices had risen steadily before Russia’s invasion of Ukraine in February – as the pandemic strained supply chains – Vladimir Putin’s foray took the measure to unprecedented heights. previous in March of 159.7.
But in another welcome boost, the overall index fell for a fourth consecutive month in July, with all five index components falling from June, led by vegetable oils and grains.
However, concerns remain over high commodity prices, which have pushed inflation rates to levels not seen in years in many developed countries, and pushed up food prices for consumers. Fears of a recession are also gaining ground, as food makers such as oat-based milk maker Oatly and breakfast cereal producer Kellogg have recently signaled weakening exchange rates. like another headwind.
Nevertheless, the first shipment of corn this week from the Black Sea port of Odessa in Ukraine – a major exporter of wheat, sunflower oil and fertilizer – under a deal brokered by Turkey and the UN, could also bring some relief.
“The decline in food prices from very high levels is welcome, especially from the perspective of access to food,” said FAO Chief Economist Maximo Torero. “However, many uncertainties remain, including high fertilizer prices which may impact future production prospects and farmers’ livelihoods, a gloomy global economic outlook and currency movements, all of which are straining global food security”.
The FAO Food Price Index fell 8.6% in July from the previous month. The vegetable oils sub-gauge fell 19.2% to a ten-month low, but prices were still 10% higher than in July last year.
Cereals fell 11.5% month-on-month, led by wheat, where world prices fell 14.5%, “partly in reaction to the agreement reached between Ukraine and the Russian Federation to unblock exports from major Black Sea ports and in part to the seasonal availability of ongoing harvests in the northern hemisphere,” the FAO said.Grain prices, however, were still up by 16.6% compared to the previous year.
Dairy product prices fell slightly by 2.5% over the month, “prices of milk powders and butter fell, while those of cheese remained stable, supported by demand from European tourist destinations”, said explained the FAO. Dairy product prices still recorded a 25% year-on-year increase.
Meat prices fell 0.5% from June, but rose 8.7% year-on-year. “International poultry meat prices hit a record high, supported by firm global import demand and tight supplies due to outbreaks of avian flu in the northern hemisphere,” the UN body said. .
Sugar prices, meanwhile, fell 3.8% month-on-month “amid concerns about the outlook for demand due to expectations of a further global economic slowdown, ‘a weakening of the Brazilian real and a drop in ethanol prices resulting in higher sugar production in Brazil during the month than before’. expected,” the FAO said.
Nevertheless, the recent heat wave in Europe supported prices due to concerns about EU sugar beet yields. Prices increased by 2.9% compared to the previous year.