World food prices rise in July, driven by cost of vegetable oils, says UN agency

Rise in price of oils offset decline in prices of sugar, cereals, dairy and meat

Global food prices in July were almost 12 per cent lower than a year ago and 22 per cent below a record peak reached in March 2022 following the start of Russia’s invasion of Ukraine. Bloomberg

The UN food agency’s world price index rose in July from a two-year low in May, led by an increase in the price of vegetable oils.

This was partially offset by a significant decline in sugar prices and small decreases in the price of cereals, dairy and meat.

The Food and Agriculture Organisation’s food price index, which tracks the monthly change in the international prices of a basket of food commodities, averaged 123.9 points in July against a revised 122.4 for the previous month.

The June reading was initially given as 122.3. The May score had marked the lowest since April 2021.

The July score was almost 12 per cent lower than a year ago and 22 per cent below a record peak reached in March 2022 following the start of Russia’s invasion of Ukraine, according to the FAO.

Soaring food prices will weigh on the growth of Mena economies this year, as double-digit food inflation hits poorer households and intensifies food insecurity in the long term, a World Bank report said in April.

About one in five people living in developing countries in the Mena region is expected to face food insecurity this year and almost eight million children under the age of five will be hungry, said the report, which examined the impact of rising food prices on the region.

More than 141 million people in the Arab world are exposed to food insecurity as the Ukraine conflict chokes crop supplies, the International Monetary Fund said last year.

Average year-on-year food inflation in the Mena region between March 2022 and December 2022 stood at 29 per cent, above headline inflation of 19.4 per cent, and these sharp increases in food prices can have long-lasting effects on future generations, the Washington-based lender said.

The FAO’s cereal price index dropped by about 0.5 per cent in July from the previous month and was 14.5 per cent below its value a year ago. The decline was caused by a fall in international coarse grain prices.

International prices of maize and sorghum declined in July due to increased seasonal supplies.

Barley prices were nearly stable, while wheat prices rose by 1.6 per cent, marking their first month-on-month increase in nine months, mainly driven by the uncertainty over Ukraine’s exports.

Continued dry conditions in Canada and the US also added pressure on prices.

Rice prices increased by 2.8 per cent in July to reach their highest level since September 2011, driven mostly by price rises in India, the FAO said.

The agency’s vegetable oil price index increased by about 12 per cent month on month, marking the first increase after seven months of consecutive declines.

This increase in July was driven by higher world prices across sunflower, palm, soy and rapeseed oils.

Global dairy prices eased 0.4 per cent from June and were 20.6 per cent below their value in the same month last year, the agency said.

Global meat prices decreased 0.3 per cent from June.

Sugar prices recorded a 3.9 per cent decrease from June, marking the second consecutive monthly decline, the FAO said.

The good progress of the sugarcane harvest in Brazil and improved rains benefiting soil moisture conditions across growing areas in India weighed on world sugar prices in July, the agency added.

Additional downward pressure on prices was exerted by sluggish import demand from Indonesia and China, the world’s largest sugar importers.

However, persistent concerns over the potential impact of the El Niño phenomenon on the 2023/24 sugarcane crops, particularly in Thailand, along with higher international crude oil prices, reined in the declines in world sugar prices, the agency said.