Rising prices of almost everything have been a big topic of late. The coronavirus pandemic and Russia’s invasion of Ukraine have set off a series of problems in our economy and the world. Many of the problems, whether economic or geographical, are also affecting food prices.
Recently, the situation has improved slightly and there has been a gradual reduction in the price of basic foodstuffs such as cereals and vegetable oils. The Food and Agriculture Organisation of the United Nations (FAO) said in its report that food prices have fallen for the fourth consecutive month, reaching a record in March.
The FAO index, which tracks the prices of cereals, vegetable oils, dairy products, meat and sugar on international markets, fell 8.6% in July from June to 140.9 points. It thus recorded the most significant month-on-month decline since October 2008. However, on a year-on-year basis, it showed an increase of 13.1%.
FAO chief economist Maximo Torero also cited several uncertainties.
“However, several uncertainties remain, including high fertilizer prices that may affect prospects for future production and farmers’ livelihoods, an unfavorable economic outlook and exchange rate movements.”
How did each food perform?
The cereal price index fell by 11.5%. The decline in wheat prices was a significant contributor, partly in response to the agreement between Ukraine and Russia to export grain from Ukraine’s main Black Sea ports. However, in a year-on-year comparison, the cereal price index shows an increase of 16.6%.
The sugar price index fell 3.8% month-on-month in July to a five-month low. This was primarily due to Brazil, where the local exchange rate weakened along with lower ethanol prices, leading to higher-than-expected production.
The vegetable oil sub-index fell 19.2% month-on-month to hit a ten-month low.
The dairy price index then fell by 2.5%. However, it was still 25.4% higher than in July 2021.
The meat price index fell by 0.5% after rising for the previous six months. This was mainly saved by a reduction in demand for beef, sheep and pork. In contrast, chicken meat prices reached their peak following a surge in demand. In addition, some supplies are limited due to the outbreak of avian flu in the northern hemisphere.