According to the United Nations Food Price Index, global food prices rose for the 12th month in a row in May, shooting up nearly 40 percent year over year. Last month also saw the sharpest rise in average food prices in over a decade, spiking 4.8 percent from April to May.
The coronavirus pandemic can be blamed for a lot of the disruption in production, labor and transport problems that have led to a short circuit in the food supply chain.
However, according to the BBC, there are growing concerns over broader inflation rates and how higher grocery bills will impact the world’s economic recovery.
Abdolreza Abbassian, the senior economist for the UN Food and Agriculture Organization (FAO), says the increased global use of vegetable oils, sugar, and cereals has caused prices to surge rapidly around the globe.
“The demand, really I would say, is almost surprising everyone,” Abbassian told CNN Business. “This demand requires a strong supply response.”
The UN FAO food price index tracks the prices of commodities around the world of a range of food including cereals, oilseeds, dairy products, meat, and sugar.
A new Cereal Supply and Demand Brief, also released with the food price index, offered FAO’s first forecast for world cereal production in 2021 – now pegged at nearly 2 821 million tons, a new record and a 1.9 percent increase from 2020, led by a foreseen 3.7 percent annual growth in maize output.
There is concern that the surge in food prices could get as bad as they were in 2008 and 2011 when spikes led to riots in more than 30 nations. “We have very little room for any production shock. We have very little room for any unexpected surge in demand in any country,” says Abbassian.
The world’s hunger problems have already reached the worst that has been seen in years, as the pandemic exacerbates food inequalities, along with the impacts of extreme weather events and political conflicts.
China’s “unpredictably huge” purchases of foreign grain this past year leaves the world’s reserves relatively flat, says Abbassian. He notes that summer weather across the Northern Hemisphere will be crucial in determining if U.S. and European harvests can make up for crop shortfalls elsewhere.
“We are not in the situation we were back in 2008-10 when inventories were really low and a lot of things were going on,” Abbassian said. “However, we are in a sort of a borderline. It’s a borderline that needs to be monitored very closely over the next few weeks because the weather is either going to really make it or create really big problems.”
