Inflation: Food prices experience the third consecutive month of increases in May

In May, food recorded its third consecutive month of increases in the food price index prepared by the Food and Agriculture Organization of the United Nations (FAO) 1.1 points, or 0.9%, above the April level, at 120.4 units.

The FAO explained that although the prices of sugar and vegetable oils fell and those of meat remained stable, cereals and dairy products rose, causing the index to rise.

The agency clarified that despite being the third monthly rebound in a row, the indicator was 3.4% below that of May 2023 and 24.9% below the maximum of 160.2 points reached in March 2022.

Wheat leads the rise in cereals

World grain export prices rose 7.1 points, or 6.3%, from the previous month with wheat leading the way. The sharp monthly rise was largely due to growing concerns about unfavorable growing conditions for the 2024 crops, which are likely to limit yields in some of the main producing areas of major exporting countries, particularly in Europe, North America and the Black Sea region. Furthermore, damage to shipping infrastructure in the Black Sea exacerbated price pressure.

Corn prices for export also increased in May, as a result of concerns about production in both Argentina (due to crop damage due to the spread of a pest), and in Brazil (due to unfavorable weather conditions), along with with the low sales activity of farmers in Ukraine, in a context of reduced supply and strong global demand.

As for other coarse grains, world prices for barley and sorghum also rose in May, as did rice.

Greater demand for dairy

Dairy products, for their part, rose 2.3 points, 1.8% more than in April, driven by increased demand from the retail and food service sectors due to the summer holidays and expectations of a decline in milk production in Western Europe and Oceania.

In the meat markets, poultry and beef prices fell and pork and sheep prices rose, leaving the monthly indicator practically unchanged compared to the previous month.

Vegetable oils decrease

Regarding vegetable oils, the FAO detailed that the drop of 3.1 points responded to the decline in palm oil prices, which more than offset the increase in the prices of soybeans, rapeseed and sunflower. International palm oil prices declined for the second consecutive month in May, as seasonal production increased in major producing countries in Southeast Asia amid prolonged weakness in global import demand.

In contrast, global soybean oil prices rebounded in May, generally supported by growing demand from the biofuels sector, particularly in Brazil. For their part, sunflower and rapeseed oil prices also rose, mainly due to the seasonal decrease in exportable availabilities in the Black Sea region and the probability of greater supply shortages in the next season.

Sugar at the lowest level since January 2023

Sugar, for its part, fell 9.5 points, or 7.5% compared to April, stringing together three consecutive months of declines and reaching its lowest level since January 2023 due to the good start of the new sugar season. harvesting in Brazil, reinforced by favorable atmospheric conditions that contributed to improving the outlook for global supply.