Global Food Prices Surge to Highest Level Since November 2022
FAO's August Global Food Price Index
Main Drivers: Abnormal Weather in Europe and Ongoing Global Conflicts
The instability in the agricultural markets has intensified due to adverse weather conditions in Europe, compounded by the ongoing wars in Ukraine and Iran. As a result, the global food price index has risen for two consecutive months, reaching its highest level since late 2022.
On September 4 (local time), the Food and Agriculture Organization of the United Nations (FAO) announced that the global food price index for August was 133.3, representing a 1.9% increase from July’s adjusted figure of 130.8. The index for July was initially released as 131.1 but was later revised.
The August index was up 2.5% compared to the same month last year, marking the highest level since November 2022, when the index stood at 135.7.
Amid shortages of agricultural materials such as plastic, nylon, and fertilizer, Palestinian farmers harvested corn in the Gaza Strip on the 31st of last month (local time). Photo by Reuters Yonhap News
View original imageFAO Chief Economist Maximo Torero stated, "The rise in global food prices in August is a warning that risks are reemerging in the food market," adding, "Simultaneous climate shocks, geopolitical tensions, and disruptions in trade and logistics are further clouding supply prospects."
The main causes included forecasts of reduced sugar beet harvests in the European Union due to abnormal weather, as well as growing concerns about the impact of El Nino on production prospects in Asia’s major sugar-producing countries.
Disruptions in the supply of agricultural inputs due to the blockade of the Strait of Hormuz, as well as logistical problems impacting Ukrainian exports, also contributed to the surge in corn prices. The rice price index rose by 0.5%, supported by continued rice purchases by countries in Asia and Africa.
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The FAO surveys international price trends for 24 commodities and compiles the food price index each month according to five categories: cereals, vegetable oils, meat, dairy, and sugar. The index is calculated by comparing current prices to the average prices from 2014 to 2016, which is set at 100.
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