Food Prices

The FAO Food Price Index hit a record high in February, exceeding the previous record of February 2011. The index rose 3.9 percent from January and 20.7 percent from February 2021. Vegetable oil, dairy, cereal, and meat price increases all contributed to the continued surge.

The escalating tensions in the Black Sea region heaped fresh risks on global food markets already struggling with soaring prices, supply-chain disruptions, and a bumpy recovery from the pandemic. Before the Ukraine crisis, overall conditions in markets for staple foods looked reasonably favourable and seemed to augur for softening prices during 2022, even as sharply rising food prices in domestic markets in many developing countries continue to raise concerns about greater food insecurity. The escalation of the conflict is now putting markets into serious turmoil.

The unfolding crisis in Ukraine has roiled commodity markets and threatens global food security. Ongoing fallout from the COVID-19 pandemic and other factors have already driven up food prices. Poor harvests in South America, strong global demand, and supply chain issues have reduced grain and oilseed inventories and driven prices to their highest levels since 2011-2013.

Food prices are skyrocketing around the world. In January, international prices for major food items climbed to a level near the heights of the global food price crises of 2007-08 and 2010-11, according to the FAO Food Price Index (Figure 1). The spike has raised concerns over the potential for another global food crisis, increasing hunger among the poor and, possibly, social unrest around the world.

In December 2021, the FAO Food Price Index fell by 0.9 percent from the previous month, with vegetable oils and sugar prices both seeing significant declines. However, in 2021 overall, the Index reached a 10-year high and was up by 28.1 percent above 2020 levels.