Global food prices at nine-month low, easing strain on households

GLOBAL food prices steadied in October, as supply disruptions caused by the war in Ukraine were partly offset by slowing demand for staples.

Good weather has bolstered supplies of crops like barley, and soaring inflation is curbing trade of goods from cheese to pork. That has helped buffer supply shocks from the Black Sea and brought a monthly food-cost index from the United Nations 0.1 per cent lower in October, holding at its lowest since January.

The continued decline offers some relief to households grappling with a cost-of-living crunch. The index is down for a seventh month, its longest slump in nine years, and food inflation is slowing down in nations from Indonesia to Paraguay. 

Prices for meat, sugar, vegetable oils and dairy fell, the UN’s Food and Agriculture Organization said on Friday (Nov 4). Still, the index remains significantly elevated versus recent years, and the soaring US dollar makes it more difficult for food-importing countries to bring in supply, said Erin Collier, an economist at the FAO in Rome.

It can take time for commodity price shifts to trickle to grocery-store shelves, and manufacturers are struggling with higher expenses for labour and energy. Plus, the trajectory of grain and vegetable-oil shipments from Ukraine remains unclear, a vital element for food prices going forward. 

Grains rose 3 per cent during the month, the only commodity group in the index to gain. Russia resumed its part in the Ukraine crop-export pact this week, after a brief suspension that temporarily halted ships. The deal comes up for renewal in mid-November and officials have yet to verify an extension. 

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Wheat and corn prices “were both supported by the ongoing uncertainty,” Collier said.

The UN’s food index soared to a record in March, shortly after Russia launched its invasion and Ukraine’s ports closed. 

“The possible termination of the deal threatens to re-ignite market prices and further exacerbate global food security concerns,” the Agricultural Market Information System said in a note on Thursday. BLOOMBERG