WORLD FOOD PRICES FALL...BUT REMAIN HIGHER THAN LAST YEAR

There might be at least a brief but welcome respite from the doom and gloom of the cost-of-living crisis with a drop in the price of some key food products on the global market.

With national and household budgets under increasing pressure, comes the welcome news from the United Nations Food and Agriculture Organisation(FAO) that its Food Prices Index has fallen for the fifth month in a row.

Food prices are among the biggest drivers of inflation globally.

The FAO Food Price Index (FFPI) is a measure of the monthly change in international prices of a basket of food commodities.

In its latest report, the FAO says its Food Price Index (FFPI) averaged 138.0 points in August 2022, down 2.7 points or 1.9 per cent from July, the fifth consecutive monthly decline.

But it cautions that despite the latest drop, the index remained 10.1 points or 7.9 per cent above its value a year ago.

While the recent deal reached between Russia and Ukraine to allow the export of grain from their war zone has been a major factor in easing the pressure on prices and supplies, other elements are influencing the more encouraging outlook.

That includes improved production prospects, especially in Canada, the United States of America and Russia itself.

Russia and Ukraine are key global producers and exporters of grain, especially wheat.

But Russia’s invasion and ongoing war with its neighbour have caused severe disruptions in the global supply of the vital food commodity pushing up prices and triggering shortages.

Nevertheless, global wheat prices remained 10.6 per cent above their values in August last year, according to the FAO report.

Another key commodity being closely monitored is cooking oil with lower world prices of palm, sunflower and rapeseed oils being recorded.

World sunflower oil values declined on lingering subdued global import demand that coincided with the gradual resumption of shipments from Ukraine’s seaports, the FAO noted.

International quotations for rapeseed oil also dropped in August, due to prospects of ample supplies for the upcoming 2022/23 season. By contrast, world soy oil prices rebounded only moderately, mainly because of concerns over the impact of unfavourable weather conditions on soybean production in the United States.

Meanwhile, international price quotations for butter and milk powders declined in August. By contrast, world cheese prices increased for the tenth consecutive month, reflecting steady global import demand and robust internal sales, especially in European tourist destinations.

The FAO’s Sugar Price Index was also down, reaching its lowest level since July 2021. This was mainly triggered by an increase in the sugar export cap in India, and lower ethanol prices in Brazil, which raised expectations of greater use of sugarcane to produce sugar.

However, the lower-than-earlier expected sugar production in Brazil in the first half of August due to adverse weather, along with persisting concerns over the impact of dry conditions on the 2022 crop in the European Union, prevented more substantial sugar price declines.

The extent to which lower food prices at the point of production are filtered down to household grocery lists are largely determined by supply chain factors, especially now the cost of fuel and electricity.