Over the last decade, world food prices have increased to the highest level, caused by a surge in demand unmet by lackluster harvests, the United Nations reported.
For the third consecutive month in October, food prices have increased, 3 percent more than they did in September, according to an index published by the Food and Agriculture Organization of the United Nations (FAO). The gains were driven by an exponential rise in the prices of vegetable oil and wheat.
The Food and Agriculture Organization Food Price Index monitors changes in prices across a wide range of food commodities. The index has increased by over 30 percent in the past year. According to the FAO on Thursday, this is the highest level since July.
In October, wheat prices surged by 5% because the level of harvests from major exporters like the United States, Canada, and Russia reduced. Other crops that increased alongside wheat, the most grown commercial crop on land are rice, barley, and maize.
With the prices of sunflower oil, soy oil, rapeseed oil, and palm oil firm, the FAO vegetable price index increased by 9.6%. The prices of palm oil spiked because of concerns about a shortage of migrant workers in Malaysia, leading to subdued production.
According to FAO, there is an increased demand for specific products like milk powder, vegetable oils, barley, and poultry. The factors contributing to the pressure on food supplies and prices include worker shortages, extreme weather, rising costs and snarled supply chains.
Many major economies have been badly hit as supermarkets in these places have been barely able to keep their shelves stocked at some point during the pandemic. For instance, in the United Kingdom, where worker shortages have become more pronounced due to Brexit, fast food chains have been forced to take off popular items on their menus because of worker shortages.
This week, there was panic buying in the public which was sparked by a missive about stockpiling food from the Chinese Ministry of Commerce. The notice ordered local authorities to ensure their citizens have an “adequate supply” of essentials during winter and stabilize food costs.
With the prices of food commodities rising, consumer goods companies are experiencing higher costs and are consequently passing those price increases to shoppers. As a result, companies like Unilever (UL), Mondelez (MDLZ) and Kraft Heinz (KHC) have all increased the prices of popular products.
Some areas may experience some relief.
The reduced demand for pigs in China has also pushed the FAO meat price index to another decline for its third consecutive month. Sugar prices, which have increased for six months in a row, dipped in October.