The price of food has increased at its fastest monthly rate in more than a decade, with food now costing 27 per cent more than it did in 2014-16.
That’s according to the latest Food and Agriculture Organisation (FAO) Food Price Index. Over the course of May, the price of food increased 4.8 per cent, taking it 39.7 per cent higher than this time last year.
The price of food has now risen 12 months in a row.
“The sharp increase in May reflected a surge in prices for oils, sugar and cereals along with firmer meat and dairy prices,” the FAO said.
The FAO cereal price index increased 6 per cent from April, led by corn.
Corn prices rose the most as drought saw Brazilian producers struggle to maintain yields. The La Nina weather pattern has meant that many farming areas have received 40 per cent less rain than normal. Across South America more broadly, the drought has affected coffee, soybeans and sugar.
At the same time, increased demand from China has increased pressure on global food stocks. The country’s recovered pig industry has triggered a greater demand for pig feed like soybeans and corn, further driving up prices.
“We have very little room for any production shock. We have very little room for any unexpected surge in demand in any country,” Abdolreza Abbassian, senior economist at the UN’s Food and Agriculture Organization, told Bloomberg.
“Any of those things could push prices up further than they are now, and then we could start getting worried.”
Palm oil has also pushed higher, with dry weather and COVID-19 production disruptions running down inventory.
Indonesia and Malaysia have both faced hurdles in the form of older and less productive palm trees and reduced labour forces due to COVID-19.
“The situation could deteriorate further. Food prices are perilously climbing to heights like those that have sparked food crises and riots in many parts of the world during the last two decades,” UNCTAD experts David Bicchetti, Carlos Razo and Miho Shirotori said.
They called for global cooperation on food trade to ensure that conflict, weather extremes and economic insecurity don’t leave people hungry.
Next week, find out how food prices in Australia are changing.