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Food price inflation looks set to linger, meaning more expense for hard-pressed shoppers. That’s going by projections from the Food and Agriculture Organization (FAO), which foresees “record” global import costs for 2023.
The FAO, a United Nations agency based in Rome, is predicting “rising world prices, driven by higher quotations for fruits, vegetables, sugar and dairy products”, despite likely increases in supply across most farm commodity categories.
In its biannual Global Food Outlook published June 15, the FAO said it “estimates that the global food bill will rise to $1.98 trillion in 2023″, up 1.5% year-on-year and following rises of 11% in 2022 and 18% in 2021.
Commodity prices started to climb during the coronavirus pandemic, as restrictions imposed during the period disrupted consumption and supply chain patterns, before the Russian invasion of Ukraine pushed the FAO’s price index to a new high in the first half of 2022.
“Since the beginning of 2021, the consumer price index (CPI), the most widely used measure of inflation, has increased to levels not seen in decades,” the FAO said.
Although commodity prices began to fall again by the second half of 2022, they remain above most of the pre-Covid decade and mean inflation in food is likely to prove stickier than in other economic sectors and wider CPI.
“Average headline inflation in major advanced economies had dropped from 8.5% late last year to below 6% in April, and timely May releases from the US and euro-zone suggest that it fell to a 20-month low of 5% last month,” said Capital Economics, a British economic analysis company, which warned that the fall “primarily reflect[s] plunging energy inflation and favourable base effects”.
“Meanwhile, food inflation – over which central banks have little influence – is still running at double-digit rates in Europe,” Capital Economics said.
