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FAO Food Price Index at Two-Year Low

Bloomberg writers Agnieszka de Sousa and Aine Quinn reported on Friday that, “Global food costs fell to the lowest level in two years in May, reviving hopes that sticky inflation on supermarket shelves will start to ease.

“Global Food Costs at 2-Year Low But Grocery Bills Stay High,” by Agnieszka de Sousa and Aine Quinn. Bloomberg News (June 2, 2023).

A United Nations’ index of food-commodity prices fell 2.6% in May, as declines in grains, vegetable oil and dairy offset higher sugar and meat costs. The gauge of prices for internationally-traded agricultural commodities has fallen 22% from the peak it reached in March last year following Russia’s invasion of Ukraine.

Wheat prices are trading near the lowest in more than two years as bumper supplies from Russia weigh on the market, and European crops are in good condition. Still, declining commodities prices are taking time to feed through to consumers, with transportation, labor and energy costs remaining high.”

Also Friday, Reuters writer Gus Trompiz reported that, “FAO’s cereal price index dropped by nearly 5% in May from the prior month, pressured by ample supply prospects and the extension of the Black Sea Grain Initiative allowing shipments from Ukraine.

“But international rice prices continued to increase in May, partly due to tighter supplies in some exporting countries, said FAO. The agency last month expressed concern over rising prices of the staple.”

The Reuters article added that, “In a separate report on cereals supply and demand, FAO forecast world cereal production this year at 2.813 billion tonnes, a 1% increase from 2022 that mainly reflected an expected rise in maize output.”

And Dow Jones writer Yusuf Khan reported on Friday that, “Central bankers have been given another shot in the arm for their fight against inflation as the cost of key foodstuffs fell in May, with prices now down more than 20% from the record high set in March 2022, according to a United Nations report released Friday.”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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