Vegetable oil, dairy prices drive continued rise of Global Food Price Index

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(Photo by Christopher Furlong/Getty Images)

With food manufacturers already facing a barrage of extra costs, latest data from Food and Agriculture Organization’s (FAO) Food Price Index suggests that the pressure from high commodity prices is unlikely to ease any time soon.

The, which tracks international prices of the most globally traded food commodities, averaged 135.7 points in January, 1.1 percent higher than in December.

As per FAO, the Vegetable Oils Price Index was the main driver in January, increasing by 4.2 percent month-on-month and reversing its December decline to reach an all-time high. 

Palm oil prices were largely underpinned by concerns over a possible reduction in export availabilities from Indonesia, the world’s leading exporter, while soy oil prices were supported by robust import purchases, particularly from India. Meanwhile, rapeseed oil prices were pushed up by lingering supply tightness, and sunflower seed oil quotations were impacted by supply tightness and surging global import demand.

The Dairy Price Index also increased by 2.4 percent, its fifth consecutive monthly rise, with the steepest increases registered for skim milk powder and butter. Cereal and Meat prices only edged up slightly, while sugar was the only commodity to post a decrease in January, down 3.1 percent from the previous month due to favourable production prospects in major exporters.

Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division said, “Reduced export availabilities on top of other supply-side constraints, especially labour shortages and unfavourable weather, largely pushed vegetable oil prices up to an all-time high. There is a concern the impacts of these constraints will not ease quickly.”

Consumer goods manufacturers around the world have been raising prices in recent months to offset higher energy, labour, supply chain, and commodity costs.