Yesterday the UN Food and Agriculture Organization (FAO) released it’s monthly index of global food prices. When the current price spike is compared with the one that occurred in 2007/8, the striking difference is the persistence of relatively high prices. Rather than falling rapidly as in 2008, this “spike” is only showing a modest decline 23 months into the cycle (see chart above). One UN economist is quoted as saying that prices are “stabilizing at high levels.” Back in October I thought it would take until January to know if this spike was actually different. Now it seems clear that it is.
Cereal prices were down marginally (see chart above) and following a record harvest there is hope that they will ease further in coming months. Meat prices, which have risen far further in this spike than in the last, show no real sign of decline (see chart below)
The dairy index dropped slightly, but the index for fats and oils actually increased.
These prices are most relevant for nations which are largely dependent on food imports. Unfortunately this month’s report is not encouraging for the world’s poor.