World food prices post steepest monthly decline in almost 14 years

The FAO's monthly index, however, shows that prices are still up by more than 13% annually

Workers load bags of flour into a truck in Sebline, Lebanon. Wheat prices led the decline in food prices in July, falling by as much as 14.5 per cent monthly. AP

World food prices posted their steepest monthly decline in almost 14 years, led by substantial drops in vegetable oil and cereals, the Food and Agriculture Organisation (FAO) said.

The FAO's food price index — a measure of the monthly change in international prices of a basket of food commodities — averaged 140.9 points in July, down about 8.7 per cent, the biggest monthly fall since October 2008, the UN agency said in its report on Friday.

However, while July's reading resulted in a fourth straight monthly decline, it is still more than 13 per cent up annually, the FAO said.

Looking globally, the report found that 868 million people do not have sufficient food and 25 countries were considered high risk and deteriorating.

Additionally, the report identified a 30 per cent increase in fertiliser prices since the beginning of the year, which contributed to a decrease in crop production.

High food prices have increased world hunger, affected individuals, families and communities, the FAO said. Households that spend a large proportion of their income on internationally traded food staples, such as wheat, rice and maize, are more likely to suffer a decline in overall welfare.

Global food prices started to rise in the middle of 2020, when businesses shut down because of the coronavirus pandemic, straining supply chains, Deep Knowledge Analytics said in a report last month.

The FAO's cereal index averaged 147.3 points in July after declining 11.5 per cent from June, but remained 16.6 per cent higher year-on-year.

World wheat prices led the decline in July, falling by as much as 14.5 per cent monthly, partly in reaction to an agreement between Ukraine and Russia that unblocked the former's main Black Sea ports. The UN and Turkey announced the deal between the two sides on July 22.

Seasonal availability from harvests in the Northern Hemisphere also weighed on prices, the FAO added.

The vegetable oil index, meanwhile, averaged 171.1 points in July, dropping almost 20 per cent to a 10-month low. The dairy index average was down 2.5 per cent to 146.4 points last month, but still more than a quarter above July 2021.

The meat index posted a 0.6 per cent drop from June, marking the first month-on-month decline after six straight increases. The sugar index hit a five-month low, falling almost 4 per cent in July for a third consecutive monthly decline.