According to the UN Food and Agriculture Organization FAO, world food prices rose in July to their highest in more than three years as adverse weather and war escalation in the Gulf and Black Sea supported crop markets.
As per food price index, averaged 131.1 points in July, climbed from 130.3 points in June which marks the highest reading since January 2023.
The upward spiral is primarily being fueled by a “perfect storm” of compounding pressures.
As reported by Reuters, the FAO’s chief economist said this week that severe weather conditions including intense heatwaves and El Niño impacts damaging crop yields alongside escalating geopolitical conflicts, particularly in the Black Sea region and the Gulf.
A 3.4% month-on-month rise in the FAO’s cereal price index drove the July trend, fuelled in turn by a 5.8% jump in wheat prices.
As per the agency, the wheat markets were affected by concerns over Black Sea export disruptions and heat damage to crops in key producing regions.
The FAO’s vegetable oil index rose 2% to its highest level since June 2022.
Higher crude oil prices amid escalation in the Iran war and strong demand for biodiesel supported palm and soy oil prices, though rapeseed and sunflower oil declined.
Sugar prices rose 5.6% on weather concerns in Europe and Asia and expectations of stronger ethanol demand in Brazil.
In contrast, meat prices fell 2.8% from a record high in June, FAO said.
Poultry, pig and bovine meat prices declined, though sheep meat prices reached a record high amid tight export supplies in Oceania. Dairy prices fell 0.7%.
The FAO’s overall food price index reading for July was slightly above a previous three-year high in April.
The latest reading was nonetheless 18.2% below its March 2022 peak that followed Russia’s full-scale invasion of Ukraine.
Economists warn that these converging agricultural shocks and geopolitical tensions threaten to usher in a renewed wave of global food inflation.
