GLOBAL – The United Nations Food and Agriculture Organization (FAO) has reported a significant 10.1% year-on-year decrease in its world price index for December, alleviating concerns over global food inflation.

The index, which monitors monthly changes in the international prices of various commodities, averaged 118.5% throughout the month.

According to the FAO’s report, the prices of meat, dairy, cereals, and vegetable oils experienced a decline on an annual basis, contributing to the overall reduction in the world price index. However, sugar prices saw an increase during the same period.

In a month-on-month comparison, the index fell by 1.5% in December, attributed to a decrease in the prices of meat, vegetable oil, and sugar, while cereal and dairy prices witnessed a rise.

The annual performance of the index revealed a reading of 124 points for the entire year, marking a substantial 13.7% decrease compared to the average value recorded in 2022.

Notably, the average food price index stood at 125.7 points in 2021 and 98.1 in 2020.

Breaking down the data, the cereal price index averaged 122.8 points in December, indicating a 1.5% increase from the previous month. This rise was fueled by elevated prices of wheat, maize, and rice.

The FAO noted that wheat export prices experienced an uptick due to weather-related logistical disruptions and tensions in the Black Sea region.

The report highlighted ongoing challenges in cereal exports from Black Sea ports, with the conflict in Ukraine affecting shipments. Russia and Ukraine, crucial wheat producers, use Black Sea ports for cereal exports worldwide.

The dairy price index recorded an increase in December, while the meat, vegetable oil, and sugar indices declined compared to the previous month. Vegetable oil prices fell by 1.4%, reflecting lower world prices across various types of oils.

Despite the decrease in sugar prices by 16.6% from November, the sugar price index remained 14.9% higher than the same period last year.

Brazil’s robust sugar production, aided by favorable weather conditions, and India’s decision to limit sugar cane used for ethanol production were cited as contributing factors.

The report concluded by highlighting the global trend of central banks considering interest rate cuts amid falling inflation, influenced by the easing of oil, gas, and food prices.

The US Federal Reserve, in particular, signalled intentions to cut interest rates, citing progress in achieving its 2% inflation goal.

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