Food Price Index reaches 15 month high – FAO

During August, the Food and Agricultural Organisation of the United Nations (FAO) Food Price Index* reached its highest level since May 2015, at 165.6 points. This was 3 points, or 2%, higher than July, and almost 7% above where the Index was the same time last year. The overall increase was driven by higher prices for all commodities used in the calculation of the Index, except for cereals.

The price of dairy, oils and sugar led the rise in August, while the increase in the Meat Price Index was more modest.

FAO report that the Meat Price Index averaged 162. 2 points in August – up 0.5 points (or 0.3%) from July but down 5% year-on-year.   International prices for ovine meat, pigmeat and poultry meat increased, although bovine prices declined. Limited pigmeat production in the EU and reduced supplies from the Oceania region provided support for these products, while solid global demand underpinned poultry prices. Prices for bovine meat eased, however, due to increased production in the US.

The Dairy Price Index averaged 154.6 points for the month (up 9% from July and 14% year-on-year), underpinned by tighter export supplies due to lower EU milk production and a slower start to the dairy season in Oceania.

The Vegetable Oil Price Index lifted due to lower global production and inventories, and rising import demand – particularly from China, India and the EU. The higher Sugar Price Index was underpinned by the strengthening Brazilian Real and the anticipated deficit in global supplies and reduced inventories in Asia for 2016-17.

*The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004 (Food and Agriculture Organisation of the United Nations).