Global food prices decline by 13.7% in 2023, reports FAO
Published on: January 10, 2024.
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World Food Prices Decline in 2023, Led by Grain and Oil Decreases
In a recent report, the UN’s Food and Agriculture Organization (FAO) announced that global food prices have decreased in 2023, largely driven by declines in grain and oil prices. The FAO noted that overall, food commodity prices have fallen by 13.7 percent compared to the previous year.
A significant factor behind this decline is the well-supplied global markets for cereals, as indicated by the FAO’s cereals price index dropping by 15.4 percent. Wheat and maize supply concerns have eased, leading to a decrease in their prices. However, the same cannot be said for rice, which experienced a 21 percent increase in prices due to the impact of the El Nino weather phenomenon and India’s restrictions on exports.
The largest decrease in prices was observed in the vegetable oil market, with the vegetable oil price index dropping by 32.7 percent. This decrease can be attributed to improved supplies and reduced use for biofuel production. In contrast, sugar prices rose by 26.7 percent, although they retreated from their peak levels in December. Brazil’s increased exports and reduced use of sugar for biofuels contributed to this fluctuation.
While the FAO’s overall index indicates a decline in food prices, it is important to note that consumer food prices in many countries are actually increasing at a faster rate than the overall inflation rate. Economist and food industry specialist Bruno Parmentier emphasized that a decrease in food commodity prices does not necessarily translate to a decrease in food prices for consumers.
It is crucial to understand that the FAO index measures commodity market prices, and it takes time for these price changes to impact supermarket shelves. Additionally, it is important to recognize that these prices represent only a fraction of the cost of processed final products.
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