Global inflation, food prices reported to be at their highest

By Azernews

By Sabina Mammadli

Discussions about inflation and food price hikes have been dominating headlines all over the world. According to the report of the Food and Agriculture Organization of the United Nations (FAO) dated December 8, 2021, and the database of the "Trading Economics Platform", prices for basic food and consumer goods in the world have risen.

Economists attribute the inflationary pressure to several various factors, such as supply chain bottlenecks, soaring commodity prices, and the global energy crunch and labour shortages as a result of the pandemic. The pandemic has set a faster rise to food prices than it had over the prior decade. Since April 2020, food prices have increased an average of 3.6 percent for food at home and 3.9 percent for food away from home on a monthly year-over-year basis.

The monthly change in international prices of food commodities is measured in the FAO Food Price Index (FFPI). Considering the fact that global net agricultural production increased by almost 70 percent since the introduction of FFPI in 1996 and the incompatible outcomes of the pandemic, global food markets have changed radically.

World prices for grain products increased by 3.1 percent in November compared to October, and by 23.2 percent compared to the same period last year. Strong demand amid tight supplies, continued to lift wheat prices for a fifth consecutive month, to their highest level since May 2011. The reduced quality of the ongoing harvest in Australia, followed by untimely rains, and uncertainty regarding potential changes to export measures in Russia also affected the situation. Latest reports from Brazil and the United Kingdom indicating smaller harvests of wheat compared to earlier expectations have resulted in a slightly lower global production forecast, reinforcing an expected year-on-year decline of 1 percent. By contrast, international rice prices remained mainly steady in November, reined in by harvest progress in various Asian suppliers and scattered import demand.

Prices for dairy products in global markets increased by 3.4 percent in November compared to October, and by 19.1 percent compared to the same period last year. In November, butter and milk powders international price quotations rose for the third consecutive month, driven by slim global export availabilities and depleted stocks. Cheese quotations have also risen slightly. Strong global import demand persisted among buyers’ efforts to secure spot supplies in anticipation of tightening markets, which added more pressure on prices in spite of market uncertainty caused by increasing COVID-19-related social restrictions

Vegetable oil prices in global markets rose to a record high in October but fell slightly (0.2 percent) in November. The quotations for palm oil remained virtually unchanged.

Although the prices for meat products in the world market decreased by 0.9 percent in November compared to October, they are 17.6 percent higher than the same period last year. In November, international quotations for pig meat fell for the fifth consecutive month as a result of reduced purchases by China, especially from the European Union. Meanwhile, international bovine meat prices remained stable.

Prices for sugar products in global markets in November this year increased by 1.4 percent compared to October and 40 percent higher than the same period last year.

The global rise of prices has not only been spotted in the increase of food prices but also in crude commodities.

The West Texas Intermediate (WTI) crude futures stabilized above $69 per barrel on December 21, after dropping overnight below $67 as the demand outlook was traders reassessed amid rising Covid cases globally, upon the increase of the Omicron variant prompting fresh lockdowns in some countries. Crude oil prices on world markets have increased by about 40 percent compared to the beginning of the year and gasoline prices by about 50 percent compared to the beginning of the year.

According to Trading Economics, crude oil is expected to trade at $68.18 per barrel by the end of this quarter.