Add the highest food prices in a decade to a long list of worries for global consumers.
According to the Food and Agricultural Organization (FAO) of the United Nations, food prices are higher than they’ve been in ten years. Their FAO Food Price index averaged 130 points in September, which is the highest since 131.9 points recorded in 2011.
A global supply chain that’s struggling to right itself amid an ongoing pandemic has been playing out via shortages of everything from glass to computer chips, alongside surging demand for natural resources. Rising food prices seem par for the course.
The September surge in food prices was largely driven by cereals and vegetable oils, with dairy and sugar prices also firmer, while the meat price sub-index was stable.
In fact, cereal prices, which averaged 132.5 points on the index, were on par with a similar gain in May, which was the highest level since 2011. Tighter export availability for wheat and strong world demand kept pushing up prices, while maize prices were 38% above levels seen in September 2020.
The vegetable oils subindex climbed to 168.6, which is the highest going back to 2003, when those records were recorded by FAO. International palm oil prices rose a third straight month hovering at 10-year highs, as robust demand coincided with weak production in Malaysia due to labor shortages.
The sugar subindex was at the highest since 2012, amid concerns over reduced output in Brazil, amid prolonged droughts and frosts, which have also affected coffee supplies.
In the U.S., the cost of goods and services rose sharply again in August, leaving inflation at a 30-year high, as shortages of goods caused companies to raise prices. Fed Chairman Jerome Powell said shortages could last until next summer, while some analysts have warned that inflation may stay elevated for years.
It’s not just food prices that are soaring. Natural gas prices in the U.S. and Germany have soared by 126% and 459% so far this year, noted Christopher Wood, global head of equity strategy at Jefferies.
With the holidays just around the corner, and Thanksgiving looming for the U.S., higher prices driven by shortages could be just one more headache for consumers who may planning for slightly bigger celebrations this year.