Global Food Prices Remain at 10-Year High in November

By Adedapo Adesanya

Food prices in the globe rose for a fourth straight month in November 2021 to remain at a 10-year high, led by strong demand for wheat and dairy products, according to the United Nations’ Food and Agriculture Organization (FAO).

The FAO’s Food Price Index, which measures the monthly change in the international price of cereal, dairy, meat, vegetable oils and sugar, jumped 1.6 points last month from the previous month to 134.4 points.

In its monthly report, the Rome-based agency noted that prices of cereals and dairy saw the sharpest gains, followed by sugar, while prices of meat and vegetable oils fell slightly in November from the previous month.

Inflation for essentials including food and energy has skyrocketed this year as a result of the recent supply-chain crisis and shortages as countries cast off COVID-19 induced restrictions.

Soaring food prices are hitting low-income households especially hard because higher prices for essentials like bread, meat, milk and rice eat up a larger share of their incomes.

The pain inflicted on consumers has placed central banks the world over in a tough position because higher interest rates help cool inflation, but they also risk denting fragile economic recoveries.

In the United States, the Federal Reserve has prioritised getting Americans back to work over reining in inflation. But with consumer price inflation accelerating at its fastest pace in 30 years in October, the US Fed Chief, Mr Jerome Powell said this week it was time to “retire” the word “transitory” when describing inflation as he signalled that the Fed could speed up the taper of its bond purchases. That in turn could pave the way for an interest rate hike sooner than expected.

According to the UN agency, cereal prices jumped 3.1 per cent in November on a monthly basis, and 23.2 per cent compared to the same period a year ago. Wheat prices have grown for five consecutive months and are now at their highest level since May 2011, due to harvest troubles in Australia linked to untimely rains and potential changes to the export policy in Russia.

Maize export prices also climbed in November, propped up by strong sales in Argentina, Brazil and Ukraine.

The dairy index rose 3.4 per cent on a monthly basis and was 19.1 per cent in November compared to a year ago, due to growing demand for milk and butter and depleted stock.

The FAO’s sugar price index averaged 120.7 points in November – 1.4 per cent higher than a month ago and a whopping 40 per cent higher than a year ago.

The meat index fell 0.9 per cent from October, dipping for a fourth consecutive month but still 17.6 per cent above what it was in November of last year. The reason for the slight decline is reduced purchases of pig meat by China, especially from the European Union.