FAO’s global food costs index drops to the lowest since April 2021
ALBAWABA – The global food costs index dropped to the lowest levels since April 2021, according to the United Nation’s (UN) Food and Agriculture Organization, as reported by Bloomberg.
The food-commodity prices index fell 2.6 percent in May, as declines in grains, vegetable oil and dairy offset higher sugar and meat costs.
Meanwhile, the gauge of prices for internationally-traded agricultural commodities has fallen 22 percent from its peak in March 2022, following Russia’s invasion of Ukraine.
Wheat prices are trading at nearly the lowest prices in more than two years with Russian supplies weighing on the market and European crops in good condition.
Still, declining prices are taking time to feed through to consumers, with transportation, labor and energy costs remaining high, Bloomberg reported.
The food index has been on a decline for 13 out of the past 14 months.
Yet, it has not reflected on commodity prices as of yet.
Despite some relief, price inflation remains high in the United States and Europe; in Germany for example, where inflation has slowed in May, according to Bloomberg. The same goes for the United Kingdom.
High consumer food prices are also, in some cases, very local and specific to individual countries, Joseph Glauber told Bloomberg, a senior fellow at the International Food Policy Research Institute.
“It’s really the macro-economy that is driving the food prices,” Glauber said.
“We see a number of macroeconomic factors including exchange rates, including energy prices, including wage price inflation and that sort of thing. That affects food prices at the end of the day.”
The commodity crunch caused by the Russia-Ukraine war has taken a sharp reversal, with a Bloomberg gauge dropping more than 10 percent in 2023, Bloomberg reported.
From copper to wheat to natural gas, the cost of some of the world’s most vital products is dropping.
