Global food prices rise the first time in four months

Global prices for food commodities like rice and vegetable oil have risen for the first time in four months.

It comes after Russia pulled out of an agreement allowing Ukraine to export, and after India restricted some of its rice exports, the U.N. Food and Agriculture Organization said Friday.

The FAO Food Price Index, which tracks monthly changes in the global prices of widely traded food commodities, recorded a 1.3% rise in July compared to June. This surge was driven by higher prices of rice and vegetable oil.

It was the first increase since April, when higher sugar prices pushed the index upwards for the first time in 12 months.

– Why this matters

Global commodity prices have been falling since hitting record highs last year, but new risks have emerged after Russia’s exit from a deal to allow Ukraine to ship grain to the world.

The war in Ukraine has disrupted global food supplies, which has exacerbated a food crisis in parts of Africa, the Middle East, and Asia.

India’s trade ban on some varieties of non-Basmati white rice, which has prompted the hoarding of the staple in some parts of the world, has created additional risks.

– Prices surge

The FAO said that international wheat prices rose by 1.6% in July over June, the first increase in nine months.

Rice prices rose 2.8% in July from a month earlier and 19.7% this year to reach their highest level since September 2011, FAO chief economist Maximo Torero said.

More expensive rice “raises substantial food security concerns for a large swath of the world population, especially those that are most poor and who dedicate a larger share of their incomes to purchase food,” the organization said in a statement.

Mr Torero said more expensive rice will be especially challenging for sub-Saharan Africa because it’s a key importer of rice.

Vegetable oil prices rose even more sharply, by 12.1% in July over June after falling for seven months in a row.

Sunflower oil rose the most by 15% following “renewed uncertainties” about supplies following the end of the grain deal.

– No relief for many

“While the world has adequate food supplies, challenges to supplies from major producers due to conflict, export restrictions or weather-induced production shortfalls can lead to supply and demand imbalances across regions,” said Torero. That will lead to a “lack of food access because of increasing prices and potential food insecurity.”

Mr Torero said the prices of food commodities on global markets have fallen since last year. but the relief has not yet reached households in developing countries.

Mr Torero explained that this is because the currencies of many developing countries have weakened against the dollar, which is used to buy grain and vegetable oil. As a result, the prices of these commodities have risen in local markets, even though they have fallen on global markets.