Inflation Outpaces The Drop In Food Costs For A Year

There are still few signs that the route is actually feeding through to grocery shelves, even though grocery costs have fallen for a 12th straight month, reaching their lowest level since July 2021.

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There was an easing of 2.1% in food commodity prices in March, marking the end of the longest run of declines in food commodity prices going back three decades, according to the United Nations. There was a decline in the price of grains, vegetable oils, and dairy commodities last month, offsetting a rise in the price of sugar and meat.

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Despite Russia's invasion of Ukraine disrupting grain exports a year ago, the gauge has fallen 21% from a record it set a year earlier, even though it's still up almost 40% from two years ago when grain exports were disrupted by the invasion.

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Máximo Torero, chief economist at the UN's Food and Agriculture Organization said in a statement that “while prices have dropped globally, they remain high in domestic markets and continue to rise, posing additional challenges to food security”, according to the statement. 

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Despite cheaper commodity prices, food inflation has continued to climb in a number of countries, largely due to all the other costs that have been added to food prices such as energy, labor, transportation, and processing. Several developing countries, particularly those that rely heavily on imported food, have worsened their situation due to the weakening of their domestic currencies in recent years, Torero explained. There is also pressure on governments to respond to rising prices in wealthier countries.

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Agricultural Market Information System, a global food market tracker, reports that food price inflation remains a significant concern in many countries. 

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The FAO says it attributed the drop in food commodity costs to supplies being plentiful, import demand is subdued, and the Black Sea Grain Initiative being extended. 

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