By Yusuf Khan
Central bankers have been given another shot in the arm for their fight against inflation as the cost of key foodstuffs fell in May, with prices now down more than 20% from the record high set in March 2022, according to a United Nations report released Friday.
The Food and Agriculture Organization of the United Nations’ price index, which tracks global prices for a basket of staple foods, averaged 124.3 points in May, down 2.6% from April’s level and just over 22% lower than the record set following Russia’s invasion of Ukraine in February 2022.
In particular, declines were led by cereals, oils and dairy products, which should help ease inflation pressures for policy makers around the world. Persistently higher prices for commodities such as energy, food and industrial goods have been a common trend since before Russia’s war with Ukraine, but food prices especially jumped following the invasion due to worries that exports would be halted from the Black Sea. The establishment of the Black Sea Grain Initiative, which last month was extended further, has eased pressures.
The FAO’s cereal price index averaged 129.7 points in May, down 4.8% from April. The UN body said this was largely led by a drop in corn prices, which fell almost 10% through the month. Wheat prices were also down 3.5% through May, with the expectation of ample stocks likely to be maintained in the coming year. Prices for grains are now more than 25% lower than where they were a year ago, the FAO said.
“A favorable outlook for 2023-24 pointing to a rebound in global supplies, with higher production expected in Brazil and the United States of America, two major exporters, weighed on prices,” the FAO said. That said, rice prices did inch higher through the month, with supplies tightening in Pakistan and Vietnam.
Meanwhile, the vegetable-oil price index fell 8.7% in May, with lower quotations for palm, sunflower, rapeseed and soy oil, amid ample global supplies especially for soy oil. Prices are now nearly half the price of a year ago, the UN body said.
Dairy prices also moved lower, by 3.2% to 118.7 points in May, the FAO said, with lower prices of cheese dragging prices, which are down by 17% from May 2022.
However, meat prices climbed by 1% on month in May, led by higher prices for cattle, with tightening supplies in the U.S. and higher demand for Brazilian beef. Poultry prices also moved higher as various regions battle with avian-flu outbreaks. Pig meat prices rose for the fourth successive month on higher production costs and increased demand for Brazilian pork.
Sugar prices also rose on month, by 5.5%, marking the fourth month in a row of rising prices. Lower-than-expected export availability coupled with concerns as to how the El Nino will affect growth this year, were to blame, according to the UN body. “Shipping delays amid strong competition from soybean and maize in Brazil also supported the increase in world sugar prices.”
Write to Yusuf Khan at firstname.lastname@example.org