The COVID-19 pandemic led to food security related concerns globally, with several regions, including the Middle-East, rushing for cover. Now the Food and Agriculture Organisation (FAO) of the United Nations has reported a surge in international prices of vegetable oils, sugar and cereals, reported ANI.
This surge led to the increase in the index, which tracks monthly changes in the international prices of commonly-traded food commodities.
As per a report released on June 3, the FAO Food Price Index averaged 127.1 points in May, 4.8 percent higher than in April and 39.7 per cent higher than in May 2020.
This surge takes the index to its highest value since September 2011 and only 7.6 percent below its all-time peak in nominal terms.
The FAO Vegetable Oil Price Index gained 7.8 percent in May, mainly reflecting rising palm, soy and rapeseed oil quotations. Palm oil prices and soy oil prices rose due to slow production and robust global demand related dynamics.
International wheat prices averaged 6.8 percent higher in May than in April, while international rice quotations held steady.
The FAO Sugar Price Index increased by 6.8 percent from April largely due to harvest delays and concerns over reduced crop yields in Brazil, the world’s largest sugar exporter, even as large export volumes from India contributed to easing the price surge.
The FAO Cereal Price Index increased six percent from April, led by international maize prices, which averaged 89.9 percent above their year-earlier value. However, maize prices started to retreat at the end of May on improved production prospects in the United States.
A new Cereal Supply and Demand Brief, also released on June 3, offered FAO’s first forecast for world cereal production in 2021, now pegged at nearly 2.82 billion tonnes, a new record and a 1.9 percent increase from 2020, led by a foreseen 3.7 percent annual growth in maize output.
The FAO Meat Price Index increased by 2.2 percent from April. The FAO Dairy Price Index rose by 1.8 percent in the month, averaging 28 percent above its level of one year ago.
The surge has raised concerns that the inflation, initially stoked by the pandemic, was accelerating. Experts said the higher inflation will hit poorer countries reliant on imports for staple goods.
Economists and analysts also warned that the return of eating out as lockdowns lifted around the world would add to price pressures. The cost of labour, transport and shipping is expected to push prices higher in the coming months.
The rise in raw material prices has been so steep that MNC giants such as Nestlé and Coca-Cola have said they would pass on any increases to consumers.