GLOBAL FOOD PRICES ARE AT THEIR HIGHEST IN A DECADE: UN

The price of food staples continued to grow in November amid a global environment of strong demand and tight supply, 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 in November from the previous month to 134.4. That is the highest level in a decade and the fourth consecutive month the index has risen.

Inflation for essentials including food and energy has skyrocketed this year, thanks to supply-chain snarls and shortages as countries cast off COVID-19 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, Fed Chief 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.

Deeper dive

According to the UN, cereal prices jumped 3.1 percent in November on a monthly basis, and 23.2 percent 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 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 percent on a monthly basis and was 19.1 percent 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 percent higher than a month ago and a whopping 40 percent higher than a year ago.

The meat index fell 0.9 percent from October, dipping for a fourth consecutive month but still 17.6 percent 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.