Food prices in global markets have risen again due to the spread of war, adverse weather and disruptions to supply chains. According to the United Nations Food and Agriculture Organization (FAO), the global food price index rose to 131.1 points in July, the highest since January 2023.

According to the latest FAO data, the July food price index rose 0.8 points from 130.3 points in June. The index is based on the prices of various internationally traded food commodities. However, July’s level was still 18.2 percent below the highest level reached after Russia launched its invasion of Ukraine in March 2022.

Cereals played the biggest role in the rise in food prices in July. The FAO cereal price index increased 3.4 percent in one month, with wheat prices rising 5.8 percent. Concerns over exports and port operations due to the war in the Black Sea region, along with adverse weather in key production areas, created upward pressure on the wheat market.

The edible oil market also saw a significant price increase. The FAO vegetable oil price index rose 2 percent in July, reaching its highest level since June 2022. Rising crude oil prices due to the conflict involving Iran and increased demand for palm and soybean oil for biodiesel contributed to the upward pressure.

Sugar prices also increased 5.6 percent in July. Adverse weather in Europe and Asia and expectations of increased demand for ethanol in Brazil contributed to the rise.

However, not all food prices increased. The meat price index fell 2.8 percent in July from June’s record level, while prices of milk and dairy products declined 0.7 percent. Sheep meat prices, however, reached a new record high due to supply shortages.

FAO’s chief economist told Reuters that the world could once again face a new phase of food inflation. The combined effects of the wars in Iran and Ukraine and the risk of El Niño have raised concerns about disruptions to production and rising costs.

Experts say that if the effects of war and climate-related extreme weather persist, global food supplies could become more uncertain. In particular, higher prices of key commodities such as wheat, edible oils and sugar could increase food inflationary pressure in import-dependent countries.

Source: Reuters