Global food prices continue to fall

This article was last updated on April 7, 2023

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Global food prices continue to fall

According to the UN’s FAO, global prices for products such as grain and oil have fallen by 20 percent from their peak in March of last year. Although prices have fallen for the twelfth consecutive month, they still remain high.

After the Russian invasion of Ukraine in February 2022, prices for important food and drink commodities reached record highs. Both countries are major grain exporters, and in November 2022, they agreed to an extension of their grain deal, which took some pressure off the grain price.

In March, the price of grain was 7.1 percent lower than in February, and the decline was aided by a successful wheat harvest in Australia and good conditions for grain growth in Europe. Additionally, a large supply and relatively low demand resulted in cheaper prices for oils such as sunflower and rapeseed, with the price of vegetable oils falling by nearly 50 percent in a year.

However, the price of sugar has risen slightly due to concerns about production in India, Thailand, and China. Although average prices for basic food were 2.1 percent lower in March than in February, falling food prices do not always equate to cheaper groceries due to high energy prices and wage increases.

Máximo Torero, Chief Economist of the FAO, warns against excessive optimism about falling prices, noting that some countries are experiencing rising costs for basic necessities. This is particularly true for developing countries that import a lot of food, where their currency depreciation against the US dollar or the euro has worsened their situation. Moreover, several poorer countries are struggling with high debts, which weakens their position on the world market.