The price of food has once again become a focus of inflationary pressures in the world. According to the food price index of the Food and Agriculture Organization of the United Nations (FAO), since the beginning of September, the food price index that includes the main categories of food products around the world has returned to be a source of inflation. In October the rebound has continued, and The highest prices seen since April 2023 have been reached. This year oils and milk are the ones that are putting the most upward pressure, while cereals are relieving the pockets of global consumers.
The food price index constructed by FAO includes, above all, retail food prices. This is the case for almost 80% of the food product references it collects, while the remaining 20% is based on the prices paid wholesale. With this index, the UN builds an indicator of food prices around the world, a useful tool to analyze the evolution of food inflation over time.
According to data published by FAO, food prices reached the highest level seen since April 2023 in October, and since September, they have begun to be inflationary again. This source of upward pressure on prices can become a problem for the main central banks on the planet, such as the European Central Bank or the US Federal Reserve (Fed), which are lowering interest rates and must monitor inflation, since that a new rebound could ruin central banks’ plans for the coming quarters.
According to the FAO price index, at current levels, and taking into account an interannual measure of them to calculate inflation, Food is going to be an inflationary engine from now until October 2025. So far this year, the index collected by the Agency has risen 7%, driven mainly by the increase in the prices of oils and dairy products. Cereals, above all, and sugar, are the two large categories that are helping to slow the rise in prices.
FAO collects an extensive list of price references to build its index and its categories, with 35 different values to establish the price of meat, 8 different quotes for dairy products, more than 40 different references for cereal prices, 10 prices of different oils and, finally, in the case of sugar, they follow the reference of the price index of the International Sugar Agreement.
Vegetable oils skyrocket in price, except olive oil
So far this year, The price of vegetable oils collected by FAO rises by 25%the category that increases the most in 2024 among the five managed by the Agency. In October, this category has increased the most, almost 7.3%, reaching “the highest level in two years”, according to the FAO itself. “In October, international palm oil prices increased for the fifth consecutive month, as a result of concerns about lower than expected production, which coincided with the possible seasonal decline in the main producing countries in Southeast Asia,” they explain.
In addition, the agency points out how “global prices for sunflower and rapeseed oils continued to increase, mainly driven by prospects of slack supply due to the expected decline in production in 2024/2025″, and added how ” “Global soybean oil prices rose on strong global demand, amid limited supply of alternative vegetable oils.” It seems that the only vegetable oil that is giving a break at the moment is the most consumed in Spain, olive oil, which is moving in the opposite direction, with a sharp drop in prices so far this year.
Dairy prices rise because of cheese
The rise in dairy products in 2024 also reaches double digits. So far this year, its price has increased by 17% in the world, and they are already at the highest levels seen since January 2023. The main driver of increases in this category of food products has been cheese. “International cheese prices recorded the largest increase,” explains FAO, “as a consequence of the limited availability of supply to meet import demand for spot supplies, in a context of strong domestic sales, especially in the EU. , where there was a seasonal drop in milk production,” says the agency.
In addition, “international butter prices also rose in October for the thirteenth consecutive month, driven by strong domestic demand, limited stocks and declining milk production in Western Europe,” they note. However, “prices for powdered milk, especially skimmed milk, decreased due to the increase in milk production in Oceania and the weakness of global demand for imports,” explains FAO.
The rise in cow prices increases the price of meat
In general, the prices of the different meats collected by FAO have fallen so far this year, but the rise in one category, that of cattle, has risen so much that it has ended up increasing, on average, the index collected by the agency. . As the agency explains, “international pork prices fell the most [en el mes de octubre]as a consequence of the increase in slaughter volumes in Western Europe, in a context of weakness in internal and external demand,” they explain.
At the same time, “world poultry meat prices decreased slightly, under pressure from the increase in supply for export by the world’s main producing countries.” For its part, “sheep meat prices remained quite stable”, unlike “international beef prices, which increased moderately, supported by the greater strength of international purchases”, indicates FAO .
Sugar moderates the falls of 2024 in October
In general, 2024 is not being a bad year for global sugar consumers, who are seeing prices fall by around 3.5% since the first day of the year. However, October has been a month of widespread increases for the raw material, with a price rise of 2.6%. According to FAO, “persistent concern about the prospects for production in 2024-2025 in Brazil, after a prolonged period of dry weather conditions, pushed prices up in October,” and they explain how “the rise in international prices of oil, which stimulated greater use of sugar cane for ethanol production in Brazil, further contributed to the increase in prices,” they point out.
Cereals give a break
The food category that has fallen the most so far this year is cereals, with a price decrease of 6.8% since the first day of the yearafter the 0.8% increase they experienced in October. Rice was one of those that fell the most in price in October, with a drop of 5.6%, “due to the decrease in indica rice prices as a result of expectations of greater competition among exporting countries, after the elimination by India of restrictions on the export of unbroken rice,” they explain from FAO.
Wheat, for its part, continued to rise for the second consecutive month, “due to concern about unfavorable weather conditions, which affected the planting of winter crops in several of the exporting countries of the northern hemisphere, such as the United States, Russia and the European Union,” explains FAO.
As for corn, “world prices continued their upward trend in October, driven by strong domestic demand in Brazil and transportation problems in some parts of the country, due to the low level of the rivers,” they highlight. Finally, “other coarse grains, such as barley, rose in price, while those of sorghum fell,” explains FAO.
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