Global Food Prices

Food prices are a critical aspect of the global food system, as they impact everyone from producers and distributors to consumers and policymakers. Fluctuations in food prices can have significant economic and social consequences, affecting the availability and affordability of food around the world.

The FAO Food Price Index, published by the Food and Agriculture Organization of the United Nations (FAO), is a key barometer of the world food market, tracking changes in global food prices over time.

Latest developments

Newly released data from February 2023, shows that the FAO Food Price Index decreased marginally by 0.6%, continuing its downward trend for the eleventh consecutive month. This decline has brought the index down by 18.7% from its peak in March 2022. The current level of the index is still significantly higher than its pre-pandemic trend.

The FAO Food Price Index is set to 100 for the years 2014-2016, meaning that the average price level for the basket of food commodities in those three years is used as the reference point or base period. Subsequent values of the index represent the percentage change in the average price level compared to the base period. For example, if the index value is 120 in a given year, it means that the average price level for the basket of food commodities in that year is 20% higher than the average price level in the base period (2014-2016).

Commodity groups

The index comprises five major commodity groups: cereals, vegetable oils, dairy, meat, and sugar. These commodity groups are tracked by their own sub-indicies:

• FAO Cereal Price Index: This sub-index tracks changes in the prices of wheat, maize, rice, barley, and other cereal crops, which are some of the most important staple foods for people around the world.
• FAO Vegetable Oil Price Index: This sub-index monitors price trends for major vegetable oils, such as palm oil, soybean oil, and sunflower oil, which are widely used in food production and are important sources of fat and calories in many diets.
• FAO Dairy Price Index: This sub-index tracks changes in the prices of dairy products, including milk, cheese, and butter, which are important sources of protein, fat, and other nutrients in many diets.
• FAO Meat Price Index: This sub-index monitors price trends for different types of meat, including beef, pork, and poultry, which are important sources of protein in many diets and are widely consumed around the world.
• FAO Sugar Price Index: This sub-index tracks changes in the prices of raw sugar and white sugar, which are important sources of calories and sweetness in many diets.

A detailed look at the sub-indicies revealst that the slight drop in the FAO Food Price Index (FFPI) in February was primarily due to significant decreases in the price indices of vegetable oils and dairy. These declines outweighed a sharp rise in the sugar price index which reached its highest level since February 2017. Cereal and meat prices prices remained stable.

Historical data

FAO publishes an extended series of the Food Price Index that is adjusted for inflation using the World Bank's manufactures unit value (MUV) index. This allows for an estimate of real agricultural prices. The MUV index is a composite index of prices for manufactured exports from major economies to low- and middle-income countries, and is considered a useful proxy for the exchange rate between agricultural commodities and manufactured products.

The chart below displays both the nominal and real FFPI series, which shows that the current levels, measured in real terms, is only surpassed historically by the period from 1974-75.

Historical data for the five sub-indicies (in both real and nominal terms) shows that all sub-indicies, except sugar, are at or near historical high levels.