In 2023, global food prices experienced a decline, particularly in grains and oils, as highlighted by the Food and Agriculture Organisation (FAO) of the United Nations on Friday.
The overall drop in world food commodity prices amounted to 13.7 percent in 2023 compared to the preceding year, as reported by the Rome-based FAO.
The cereal price index specifically witnessed a substantial decrease of 15.4 percent, reflecting well-supplied global markets. This marked a notable contrast to 2022, when prices surged following Russia's invasion of Ukraine, a significant grain exporter.
Wheat and maize saw eased supply concerns, contributing to the decline in the cereal price index. However, rice prices experienced a contrary trend, surging by 21 percent due to the impact of the El Nino weather phenomenon and India's restrictions on exports.
The vegetable oil price index registered the most significant fall, dropping by 32.7 percent. This reduction was attributed to improved supplies and decreased usage for biofuel production.
On the other hand, sugar prices increased by 26.7 percent overall. While they retreated from their December highs, factors such as Brazil's increased exports and reduced biofuel usage played a role in the upward trend.
Despite the FAO's overall index depicting a decline, consumer food prices in many countries are on the rise, often outpacing the overall inflation rate. Economist and food industry specialist Bruno Parmentier emphasised that a drop in food commodity prices doesn't necessarily translate to lower food prices for consumers.
The FAO index primarily measures commodity market prices, and the impact on supermarket shelves may take time. Additionally, it represents only a fraction of the costs in the production of final products, with factors like labour, energy, water, and rent playing a more substantial role in the overall cost.
