Global food prices are nearing record highs, adding to the surging cost of living for consumers.
The United Nations’ index of food prices rose 1.1% in January, pushed up by more expensive vegetable oils and dairy products. The gauge is edging closer to 2011’s all-time high, and unfavorable weather for crops and the fallout from an energy crisis in Europe threaten to keep prices high moving forward.
Inflation has been running rampant around the world, and the latest leg higher in the UN’s food index could further stretch household budgets. The commodities tracked by the gauge are used in most grocery store products or fed to animals.
Sugar was the only commodity whose price declined during January, while costs for meat, grain, dairy and vegetable oils all rose. Countries from Turkey to Paraguay are facing particularly high food inflation.
Surging energy prices have bolstered the appeal of crop-based biofuels and raised the cost of fertilizers and fuel for farmers. That could force cutbacks on farm inputs, particularly in developing nations, which may increase reliance on crop imports if harvests falter, said the UN in its latest report.
Crop supplies also face risks from bad weather and geopolitical tensions. A dry spell has hit South American soy fields, while palm oil prices have reached a record high due to labour shortages and export restrictions. The possibility of conflict in Ukraine also has the market watching for any impact to Black Sea grain shipments.
