Inflation accelerated due to increase in vegetable oils, dairy products; Data taken mostly before the Russian invasion
Inflation accelerated due to increase in vegetable oils, dairy products; Data taken mostly before the Russian invasion
World food prices hit a record high in February, with vegetable oils and dairy products up 20.7% year-on-year, the UN food agency said on Friday.
The Food and Agriculture Organization’s (FAO) food price index, which tracks the most traded food commodities globally, averaged 140.7 points last month, compared to a revised 135.4 in January. This figure was previously given as 135.7.
Higher food prices have contributed to a broader rise in inflation as economies recover from the coronavirus crisis and the FAO has warned that higher costs are putting poorer populations at risk in countries dependent on imports.
FAO economist Upali Galketi Archilge said concerns over crop conditions and export availability provided only a partial explanation for the rise in global food prices.
“A huge push to food price inflation comes from external food production, particularly the energy, fertilizer and feed sectors,” he said. “All of these factors squeeze food producers’ profit margins, discouraging them from investing and expanding production.”
The data for the February report was mostly compiled before the Russian invasion of Ukraine. Worries of tension in the Black Sea region were weighing heavily on agricultural markets even before the violence erupted, but analysts warned that a prolonged conflict could have a major impact on grain exports.
The FAO said its vegetable oil index rose 8.5 per cent month-on-month in February, hitting another record high, driven by increases in palm, soy and sunflower oil prices. Ukraine and Russia account for about 80% of the global exports of sunflower oil.
With maize prices up 5.1% and wheat prices up 2.1%, the grain price index rose 3.0% on the month, largely reflecting uncertainty about global supply flows from Black Sea ports.
The FAO’s dairy price index rose 6.4%, its sixth consecutive monthly increase, based on tight global supplies, while meat prices rose 1.1% in February.
In contrast, sugar was the only index to decline 1.9% over the previous month, partly due to favorable production prospects in major exporters India and Thailand.
The FAO also released its first estimates for grain production in 2022, with global wheat production expected to increase from 775.4 million to 790 million tonnes in 2021, thanks to higher yields and hopes of widespread planting in Canada, the United States and Asia.
The UN agency, however, cautioned that its estimates do not take into account the potential impact of the conflict between Russia and Ukraine.
The FAO said maize production in Argentina and Brazil was projected to be above average in 2022, particularly in Brazil where maize crops reached a record high of 112 million tonnes.
World grain use in 2021/22 was projected to increase by 1.5% from 2020/21 levels to 2.802 billion tonnes. The FAO forecast for world grain stocks by the end of the season in 2022 was 836 million tonnes.