Global Food Commodity Prices Revert to 2021 Levels in 2023

According to the FAO Food Price Index, food commodity prices have fallen back to 2021 levels in 2023. Previously, global food prices had surged to record highs in 2022 amid pandemic effects and Russia's invasion of Ukraine. The index stood at 118.5 points in December, indicating an 18.5 percent increase in global food commodity prices compared to the 2014-2016 base period. It had hit a high of nearly 160 points in March 2022 shortly after the invasion of Ukraine. Even before, food prices had surged during 2021 as supply and demand disruptions affected many goods during the pandemic and harvest setbacks also added to the development.

The war in Ukraine has a big impact on the cereal price subindex, one of five indices that make up the FAO Food Price Index. After all, the region is often referred to as the world's breadbasket due to its major role in global grain supplies. The price of global cereal commodities actually drove up the Food Price Index in December as disruptions to Black Sea grain transport occurred. However, the issues weren't near as severe as at the beginning of the war, causing the subindex to increase by 1.8 points from November. The development was however offset by a big slump in the sugar price subindex, which lost 26.8 points due to overproduction in Brazil.

The Vegetable Oil Price Index as well as the Meat Price Index were down slightly between November and December amid weaker demand while the Dairy Price Index also rose slightly due to holiday demand in Europe and general demand in the Near East. Overall, the index lost 1.8 points month-over-month.