Global food prices fall 10% in 2023, easing inflation worries

January 09, 2024 (MLN): Global food prices posted a decline of 10% in 2023, the biggest annual drop since 2015, signaling a cooldown in food inflation.

The FAO Food Price Index (FFPI), created by the United Nations’ Food and Agriculture Organization was recorded at 118.5 in December 2023, as compared to 131.8 in December 2022.

While the index tracks raw commodity costs rather than retail prices, the steep drop could indicate potential relief on the way for consumers, as food prices ease from a 2022 peak that followed Russia’s invasion of Ukraine and contributed to a cost-of-living crisis in countries across the world, Bloomberg reported.

Corn and wheat futures prices saw their biggest annual declines in a decade last year, as supply concerns faded. Futures prices for hogs and palm oil also posted big declines.

While the UN’s index is now at the lowest level since February 2021, lower wholesale costs have been taking some time to percolate down to supermarkets and consumers.

However, there are signs that food inflation is cooling. The indicator fell sharply in the UK last month to the lowest since June 2022, while food, fuel, and alcohol price rises have also slowed in New Zealand.

In Pakistan, bigger production is likely to help slow food price rises.

The FFPI is a measure of the monthly change in international prices of a basket of food commodities.

It consists of the average of five commodity group price indices weighted by the average export shares of each of the groups over 2014-2016.

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