The FAO Food Price Index (FFPI), which contains the monthly change in international prices of a basket of food commodities, equated 130.0 points in September 2021 — that rate is 32.1 points higher than the same month last year and up 1.5 points from August. The FFPI has not reached these levels since 2011 when it hit 131.9.
The spike was mainly caused by “tightening supply conditions and robust demand for staples such as wheat and palm oil,” the FAO reported.
Vegetable oil prices have jumped, brought on by strong global demand coupled with “persisting migrant labor shortages” in Malaysia. The overall FAO Vegetable Oil Price Index averaged 168.6 points in September, which is about 60 percent above its year-earlier level and is up 2.9 points (or 1.7 percent) from August.
The FAO Cereal Price Index averaged 132.5 points in September, up 2.6 points (2.0 percent) from August and 28.5 points (27.3 percent) above its percentage from the corresponding month last year.
“Among the major cereals, world wheat prices increased the most in September, up almost 4 percent month-on-month and as much as 41 percent year-on-year,” according to the report, which blamed tightening export availability and high demand on increasing prices.
Dairy and sugar also saw price increases, while meat prices were more aligned with August prices.
Global sugar prices increased to 0.5% in September with concern over opposing crop weather in top exporter Brazil partly offset by reducing import demand and a favorable production outlook in India and Thailand, according to FAO.
For cereal production, FAO projected a record world crop of 2.800 billion tonnes in 2021, up slightly from 2.788 billion estimated a month ago.
That would be below world cereal use of 2.811 billion tonnes, an estimate changed by 2.7 million tonnes from a month earlier largely to show increased wheat use in animal feed, FAO said in a cereal supply and demand note.
Global cereal stocks were expected to ease in 2021/22 but would still be at a comfortable level, FAO added.
Extensive supply chain disturbances, increasing freight costs, and labor shortages are also worsening the subject, driving some companies to raise their prices to pay suppliers and turn a profit.
A Biden administration Member of the Council of Economic Advisers admitted that the United States could experience higher-than-normal inflation well into the next year — despite earlier assurances that it would “work itself out in the coming months.” President Biden’s inflation is reportedly costing average American households an extra $175 per month.