Consumers can breathe a bit more easily after the FAO Food Price Index (FFPI) in February cooled 10.5 % from a year ago.
The Food and Agriculture Organisation (FAO) of the UN released the index on Friday.
The FFPI, which is a measure of the monthly change in international prices of a basket of food commodities, stood at 117.3 points in February this year, down 13.8 points.
It was down 0.9 points (0.7%) from its revised January level, as decreases in the price indices for cereals and vegetable oils more than offset increases in those for sugar, meat and dairy products.
Globally, food prices rocked up last year after Russia invaded Ukraine, leading to supply chain issues, while inflation rocketed.
However, global inflation is cooling. According to Reuters, US Federal Reserve chair Jerome Powell told US lawmakers last week that interest rate cuts were still likely in the coming months, but only if warranted by further evidence of falling inflation.
The FAO Cereal Price Index averaged 113.8 points in February, down 6.1 points (5%) from January and as much as 32.9 points (22.4%) below its February 2023 value as international prices of all major cereals declined month on month.
“Maize export prices dropped the most as expectations of large harvests in Argentina and Brazil, along with competitive prices offered by Ukraine eager to take advantage of the smooth running of the maritime trade route, weighed on the market.
“As regards wheat, the decline in international prices was mostly the result of lower export quotations due a strong export pace from the Russian Federation, which exerted downward pressure on prices from other origins, in particular the EU,” the report noted.
World prices of barley and sorghum also eased. International rice prices edged down by 1.6% in February as, aside from Indonesian purchases, fresh import demand remained broadly slow and new-crop harvests began in some suppliers.
The FAO Vegetable Oil Price Index averaged 120.9 points in February, down 1.6 points (1.3%) from January and standing 15.0 points (11%) below its year-ago level. The decline was said to mainly reflect lower world prices of soy, sunflower and rapeseed oils, more than offsetting marginally higher palm oil quotations.
The FAO Dairy Price Index averaged 120.0 points in February, up 1.3 points (1.1%) from January, but stood 18.6 points (13.4%) below its value in the corresponding month last year.
In February, world butter prices rose the most, underpinned by higher import demand from Asian buyers and seasonally declining milk production in Oceania. Meanwhile, whole milk powder prices continued to rise, albeit slowly, principally due to increased import demand, especially from China, which was partially offset by a drop in the EU prices.
The FAO Meat Price Index averaged 112.4 points in February, up by 2.0 points (1.8%) from January, 0.9 points (0.8%) below its corresponding value a year ago. International price quotations for poultry meat rose the most, followed by bovine meat, underpinned mainly by a rise in demand from leading importing countries.
The FAO Sugar Price Index averaged 140.8 points in February, up 4.4 points (3.2%) from January, 15.6 points (12.5% above its value a year ago. Persistent concerns over the outlook for the upcoming season in Brazil following a prolonged period of below-average rainfall continued to support world sugar prices, exacerbating the seasonal upward pressure.
However, the Food Price Monitor for February of the National Agricultural Marketing Council (NAMC) published last week, which is based on the monthly average food price data for the period January 2023 to January2024, showed that this year, the cost of this basic NAMC urban food basket was R1 251.50, equivalent to a 10.7% (R121) increase from January 2023 (year-on-year) and an increase by 1.0% (R12) from December 2023 (month-on-month).
“The cost of this food basket expressed as a share of the average monthly income of the poorest 30% of the population increased from 33.9% in January 2023 to 37.6% in January 2024.
“The cost of the food basket expressed as a share of the average monthly income of the wealthiest 20% of the population increased from 2.3% in January 2023 to 2.5% in January 2024,” the report showed.
BUSINESS REPORT