For the third month in a row, there was a decrease in food prices in June, although any gains are not expected to be felt by shoppers’ grocery bills until later this year.
The price of major wholesale food commodities fell by 2.3 percent in June compared to May, according to the most recent United Nations Food and Price Index.
After the Russia-Ukraine war, there was less demand for cereals and cooking oils, so their prices went up.
However, prices are still 23 percent higher overall than they were in June 2021.
The average price of cereals, vegetable oil, dairy, meat, and sugar is tracked by the UN Food Prices Index, which also includes prices for the other most widely traded food commodities.
The Russian invasion of Ukraine, concerns over inclement weather, high levels of demand worldwide, and growing production and transportation costs have all contributed to price increases.
The chief economist for the Food and Agriculture Organization, Maximo Torero Cullen, said that the same things are still driving up prices around the world as they did before.
According to the most recent numbers, last month’s cereal prices fell by 4 percent, and edible oil prices dropped by 7.6 percent due to the availability of substitutes and improved harvests abroad. Even while the cost of sugar decreased, the cost of dairy products and meat increased.
One of the factors driving increasing costs at supermarket checkouts is the growth in the price of food commodities on a worldwide scale. As a result, inflation in the United Kingdom reached a 40-year high of 9.1 percent in the year leading up to May.
The Bank of England has hiked UK interest rates from 1% to 1.25% in an effort to slow the rate of skyrocketing prices.
As a result of the pandemic’s disruption, food prices had already begun to rise by the beginning of 2022. However, it was Russia’s invasion of Ukraine that caused them to reach record highs, straining household budgets and causing hardship to reach previously unheard-of heights all around the world.
Even though they only contribute 2% of world trade, Russia and Ukraine are major suppliers of food staples like grain, sunflower oil, and fertilizer, which means that even though they are thousands of miles away, the effects of this conflict are felt on plates. As alternative sources improved, prices across all product groups increased by 23% from a year before, despite the fact that the cost of grains and oils had just decreased. Households will experience more immediate suffering as it will take around six months before wholesale prices are reflected on store shelves. Also, the prices of these goods are already hard to predict, so there may be more surprises in store.
Since the start of COVID-19, the UN estimates that 150 million extra people have experienced hunger, and the war may add as many as 40 million to that number. Economists caution that a return to a period of relatively inexpensive food is improbable, even when the inflation in food prices eventually levels out.
A food crisis caused by the conflict in Ukraine might last years without help, the head of the World Trade Organization warned last month.
Read Also: WTO Chief warns the world of impending global food crisis
According to WTO Director General Ngozi Okonjo-Iweala, 9 percent of the world’s wheat is exported from Ukraine. This might have a particularly negative impact on African nations. There may also be a lack of fertilizer. Additionally, it supplies 16% of the world’s maize as well as a sizeable 42 percent of the sunflower oil industry globally.
