Fastest food prices drop since 2008: nearly 10 %

Global food prices have taken a corrective hit after skyrocketing in the past years: in July, prices took their largest tumble since 2008, even though it was already the fifth consecutive monthly decline. Still, much uncertainty remains.

Relative tumble

After peaking due to the outbreak of the war in Ukraine, the food prices on world markets have been going down for five months in a row now. In July, prices fell by an average of 9 %. The Food and Agriculture Organisation of the United Nations (FAO) says this is the largest drop since the financial crisis of 2008.

However, these are the prices of raw materials for basic products and not the prices that consumers pay for finished products in the supermarket. The UN food price index tracks the international prices of five food commodities: cereals, vegetable oils, dairy products, meat and sugar.

Nowhere near 2021 prices yet

Cereals became 11.5 % cheaper last month, helped by the recent agreement with Russia to let Ukraine export cereals through its ports. Although this operation is a logistical nightmare, three ships with grain have already been able to leave. Early maize harvests in Brazil and Argentina also helped to relieve the pressure. Still, the prices remain 16.6 % higher than a year ago.

The most striking decrease is seen in vegetable oils: their prices fell 19 % cheaper in July and ended at the lowest level in ten months. Since the war started, many producers have tried to use less oil or look for alternatives, while Indonesia has started to export more palm oil.

Prospects remain uncertain

Sugar prices dropped 4 %, while meat prices remained more or less stable. Dairy products are traded 2.5 % cheaper today, but these price decreases are relative: butter, cheese and milk for instance are still on average 25 % more expensive than a year ago.

The price drops are good news for global food security, FAO chief economist Maximo Torero said, but many uncertainties remain. He points to high fertiliser prices, which can affect farmers’ production and incomes, a bleak economic outlook and currency fluctuations as threats.