According to the FAO's (Food and Agriculture Organisation of the United Nations) most recent Food Price Index (FPI), commodity food prices increased worldwide in July. The research suggested that the termination of the Black Sea Grain initiative influenced this increase.
Secondly, this rise can be attributed to new trade restrictions on rice. For July, averaging 123.9 points through the FAO's FPI tracking system, there was a 1.3 percent jump from the previous month. Despite this, it was 11.8 percent below its level compared to July 2022.
It was also propelled by the rapid increase in the FAO Vegetable Oil price index, which increased by 12.1 percent in June after declining for seven consecutive months. However, sunflower oil prices experienced a rebound of 15 percent in July, primarily due to the Russian Federation's move to end the Black Sea Grain Initiative, which has caused general uncertainties. Furthermore, global prices for palm, soy, and rapeseed oils rose with growing concern revolving around output prospects in market-leading producing countries.
The Cereal price index decreased 0.5 percent in July, mainly due to a 4.8 percent decline in international course grain quotations, as there have been high levels of seasonal supply of maise from harvests which have continued in countries like Argentina and Brazil. This is coupled with the fact there has been a high-than-anticipated production of cereals in the USA.
Contrasting this, however, are wheat prices, which increased 1.6 percent. This is the first wheat increase in nine months, again due to the ongoing conflicts, with the uncertainty of exports from Ukraine and ongoing dry conditions in North America.
Increasing by 2.8 percent, the Rice price index saw its annual price increase by 19.7 percent compared to July 2022, the highest level rice prices have reached since September 2011.
India's prohibition from the 20th of July of non-parboiled Indica exports fostered expectations of more significant sales in other origins—this increased pressure on prices by seasonally more limited supplies and Asian purchases.
The FAO has warned that this pressure on rice prices has raised substantial food security concerns for significant segments of the global population, particularly those economically and financially poor, where the largest segment of their income is spent on purchasing food. With added export restrictions, the results could become more adverse, with consequences on production, consumption and prices that will have long-lasting effects, more significant than the amount of time the new restriction is being implemented, which will further risk the already high domestic food inflation existing in many countries.
The Sugar price index decreased by 3.9 percent, reflecting Brazil's sugarcane harvest and improved weather conditions across many growing areas in India. This is in conjunction with lowered product demand in Indonesia and China, the world's largest sugar importers.
However, the El Niño phenomenon and concern about what this will mean for sugarcane crops and higher prices globally for crude oil have mitigated this decline.
The FAO Dairy Price Index decreased by 0.4 percent in July, 20.6 percent below its July 2022 value.
Lastly, the Meat Price Index has decreased by 0.3 percent from June. This is primarily due to declined reliable supply of bovine, ovine, and poultry meat, in some cases, lowered demand from the industry's leading importers.