The Food and Agriculture Organization's benchmark for world food prices rose to a new record last month: 140,7 points (+3,9%). This increase is being led by higher prices for vegetable oils and dairy products, the United Nations food organization reported this week. A further increase cannot be ruled out, because the Russian invasion of Ukraine for the month of February has only been partially included.
The food price index of the Food and Agriculture Organization (FAO) for the month of February stands at a record level of 140,7 points. That is 3,9% higher than in January and no less than 20,7% above the level of the same period a year earlier. The increase is led by higher prices for vegetable oils, such as palm oil, soybean oil and sunflower oil† The price index for this category rose by 8,5% in February, compared to a month earlier. That increase is in turn driven by continued strong demand, coupled with supply-side challenges. This includes export restrictions from Indonesia and lower harvest forecasts for soybean in South America.
The recent war between Russia and Ukraine mainly affects the price index for grains. It rose 3% last month, driven by rising quotes. For example, international maize prices rose 5,1% due to ongoing concerns about crop conditions in South America and uncertainties about exports from Ukraine. World wheat prices also rose by 2,1%. Here too, the uncertainties about supply from the Black Sea region play a major role.
More rising indices
But not only the indexes for vegetable oils and grains are moving up, the dairy price index of the United Nations food organization was on average 6,4% higher in February than in January. This increase is supported by lower than expected milk supply in western Europe and in Oceania. At the same time, import demand from North Asia and the Middle East is strong. The meat price index also rose by 1,1%, with international quotations for beef reached a new record. Rice prices also rose by 1,1%. The sugar price index did fall, by 1,9%. This is due to favorable production prospects in important export countries.
Food prices are expected to remain high for the foreseeable future. This is partly due to the war in Ukraine. The consequences of this are only partly included in the index for the month of February. "Concerns about crop conditions and export opportunities only explain part of the current food price increases. Greater pressure on food price inflation comes from outside food production. Think of the energy, fertilizer and feed sectors, which continue to rise," said FAO. economist Upali Galketi Aratchilage in an explanation.
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