Global food prices post the biggest annual drop since 2015, shows data

By Áine Quinn

Global food prices posted the biggest annual drop since 2015, amid signs that lower wholesale food prices are starting to feed through to supermarket shelves.
 

An index of food-commodity prices created by the United Nations’ Food and Agriculture Organization fell about 10 per cent in 2023, according to data released on Friday. 

The FAO Food Price Index (FFPI) stood at 118.5 points in December 2023, down 1.8 points (1.5 percent) from its November level, as decreases in the price indices for sugar, vegetable oils ,and meat more than offset increases in dairy products and cereals. The index stood 13.3 points (10.1 per cent) below its corresponding level one year ago. For 2023 as a whole, the index recorded 124.0 points, 19.7 points (13.7 percent) lower than the average value in 2022.
 

The FAO Cereal Price Index averaged 122.8 points in December, up 1.8 points (1.5 per cent) from November, but still 24.4 points (16.6 per cent) below its December 2022 value. After falling for four consecutive months, wheat export prices increased in December, supported by weather-related logistical disruptions in some major exporters and tensions in the Black Sea amidst solid demand. World maize prices also strengthened in December, underpinned by concerns about Brazil’s second crop plantings, and logistical constraints hindering shipments from Ukraine. Among other coarse grains, world prices of barley increased, while sorghum prices decreased slightly. In December, the FAO All Rice Price Index rose 1.6 per cent above its November level. Indica quotations underpinned this increase, rising in response to purchases by some Asian buyers and reduced competition among exporters owing to India’s export restrictions and tight availabilities in Vietnam. 

 

According to the rice index, international rice prices registered a 21 percent annual increase in 2023, largely owing to concerns about the impact of El Niño on rice production and in the aftermath of export restrictions imposed by India. 
 

For the year as a whole, the FAO Cereal Price Index stood at 130.9 points in 2023, down 23.8 points (15.4 per cent) from the 2022 record annual average, reflecting well supplied global markets.
 

While the index tracks raw commodity costs rather than retail prices, the steep drop could indicate potential relief on the way for consumers, as food prices ease from a 2022 peak that followed Russia’s invasion of Ukraine and contributed to a cost-of-living crisis in countries across the world. 
 

Corn and wheat futures prices saw their biggest annual declines in a decade last year, as supply concerns faded. Futures prices for hogs and palm oil also posted big declines. 
 

While the UN’s index is now at the lowest level since February 2021, lower wholesale costs have been taking some time to percolate down to supermarkets and consumers. However, there are signs that food inflation is cooling. 
 

The indicator fell sharply in the UK last month to the lowest since June 2022, while food, fuel and alcohol price rises have also slowed in New Zealand. In Pakistan, bigger production is likely to help slow food price rises.
 

The FAO grain index fell more than 16 per cent compared to this time last year, despite increasing slightly last month due to weather-related disruption in shipments from key exporters. 
 

In December, falls in the price indices for sugar, vegetable oils and meat “more than offset increases in dairy products and cereal” according to the organisation.
 

For December, the index of food-commodity prices was 1.5 per cent lower from a month ago.