In a new report via the Rome-based Food and Agriculture Organization (FAO), global food prices are on the rise, once again, and back to near-decade highs.
FAO released a statement Thursday that detailed after two consecutive months of declines, world food prices in August jumped due to solid gains in sugar, vegetable oils, and cereals.
FAO’s food price index, which follows international prices of globally traded food commodities, averaged 127.4 points in August, up 3.9 points (3.1%) from July and 31.5 points (32.9%) from the same period last year.
In August, the most significant driver of food prices was FAO Sugar Price Index, which jumped 9.6% from July due to frost damage to crops in Brazil, the world’s largest sugar exporter.
The second-largest jump in the basket was the FAO Vegetable Oil Price Index, which rose 6.7% last month, as international palm oil prices soared to historic highs because of below-potential production.
The FAO Cereal Price Index increased 3.4% higher in August versus July. The meat index edged up slightly in August, and the dairy index sunk.
A combination of global droughts, volatile weather, labor shortages, and supply chain disruptions persisting from COVID, among others, have contributed to the rapid rise in food prices over the last year.
Heading into fall, soaring food inflation shows no signs of abating and may worsen. This may cause socio-economic turmoil in emerging market economies, mainly because people in those countries allocate more of their daily budgets to food.
SocGen’s Albert Edwards first warned about soaring food inflation last December ahead of the big rally in food prices in a note.
He said a driver of food inflation has been the global central bank’s ultra-loose monetary policy and warns about uprisings in underdeveloped countries.
In first-world countries like the US and Europe, surging food inflation hasn’t become a big deal yet, for consumers but may start to irritate the working-poor this fall.
Food inflation globally has been ultra-low for the last few decades. Now food prices are soaring.