Inflation fears grow as Covid fallout bites

ROME: Global food prices rose for an eighth consecutive month in January to their highest since July 2014, the United Nations food agency said yesterday, as economies continue to battle fallout from the Covid-19 pandemic.

The Food and Agriculture Organisation’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 113.3 points last month from December’s 108.6, revised up from 107.5. Jumps in cereals, sugar and vegetable oils led the rise, the agency said.

Some governments are taking action to tackle surging domestic food prices, although such moves drive global values higher by reducing supplies for international markets. The consequence is already evident in grain prices, such as corn, hitting multi-year highs.

Grain-consuming giant China is stockpiling supplies, while Argentina has suspended sales of maize for export until February 28. Russia is imposing taxes on exports of wheat, barley and maize.

The World Bank said in December that food price increases, combined with reduced incomes, had aggravated chronic and acute hunger, hitting vulnerable households in almost every country.

The Rome-based FAO said in a statement that worldwide cereal harvests remained on course for an annual record in 2020, but warned of a sharp fall in stocks and signalled unexpectedly large import demands from China.

FAO’s cereal price index climbed 7.1 per cent month-on-month in January, led higher by international maize prices. They soared 11.2pc, some 42.3pc above their level a year ago, buoyed in part by purchases by China and lower-than-expected US production.

Wheat prices increased 6.8pc, driven by strong global demand and expectations of reduced sales by Russia when its wheat export duty doubles in March 2021, FAO said.

Sugar jumped 8.1pc, with worries about worsening crop prospects in the European Union, Russia and Thailand, and dry weather in South America, pushing up import demand.

The vegetable oil price index increased 5.8pc to its highest level since May 2012, driven in part by lower-than-expected palm oil production in Indonesia and Malaysia. Soyoil prices were fuelled by reduced export opportunities and prolonged strikes in Argentina.

Dairy prices rose 1.6pc, underpinned by heavy Chinese purchases ahead of the upcoming New Year holiday.

The meat index posted a 1pc gain, led by brisk imports of poultry, especially from Brazil, amid avian influenza outbreaks that have hampered exports from several European countries.

The UN agency said China was importing unexpectedly large quantities of maize this season, which was having a significant knock-on impact on estimates for world utilisation and stocks.




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