As supply worries subsided, global food prices decreased in 2023, with notable drops for grains and oils, the UN Food and Agriculture Organization reported on Friday.
According to the Rome-based FAO, global food product prices decreased by 13.7 percent overall in 2023 compared to the previous year.
In contrast to 2022, when prices skyrocketed following Russia’s invasion of Ukraine, a significant grain exporter, the FAO’s cereal price index decreased 15.4%, “reflecting well supplied global markets”.
For wheat and maize, supply worries subsided, but because of the effects of the El Nino weather phenomena and India’s export restrictions, rice supply issues persisted. Last year, rice prices increased by 21%.
The vegetable oil price index posted the biggest fall last year, dropping 32.7 percent, thanks to improved supplies and reduced use for biofuel production.
Sugar prices, on the other contrary, jumped 26.7 percent overall, though they retreated from their highs in December thanks to Brazil stepping up exports and reduced use for biofuels.
While the FAO’s overall index dropped, consumer food prices in many countries are rising, often faster than the overall inflation rate.
“The fact that food commodity prices drop doesn’t necessarily mean a drop in food prices,” noted economist and food industry specialist Bruno Parmentier.
The FAO index measures commodity market prices, and it can take a while for these to filter through to supermarket shelves. They represent only a fraction of the cost of processed final products.
“Flour only represents four to eight percent of the price of a baguette,” said Parmentier. “Most of it is the cost of labour and production costs” such as energy, water and rent, he added.
