The FAO global food prices fell 2.1% m/m in August (non-seasonally adjusted) with only sugar rising in terms of broad categories. Supply in many foodstuffs is currently ample. Food prices fell 11.8% y/y in line with July and so they continue to put downward pressure on overall inflation but that has lessened over the last few months as the trough was in May at -21.5% y/y.

• There has been some focus on cereals prices with Russia pulling out of the Black Sea Grain Initiative and India banning the export of non-basmati rice. Despite these events, global cereal prices fell 0.7% m/m in August to be down 14.1% y/y due to wheat and maize prices falling due to good harvests.
• The FAO All Rice Price Index rose almost 10% on the month due to India’s restrictions in an already tight market and the reaction of other suppliers. In response, they have renegotiated contracts, held onto supply and ceased to make price offers. In September to date the trend has continued with processed rice prices 5.1% m/m and 37.2% y/y higher after 8.6% and 28.1% in August and remains a concern in a number of countries.
• There was a broad-based decline in meat prices with the FAO index down 3% m/m to be down 5.4% y/y. Dairy also saw all its components fall with the index -4% m/m and -22.4% y/y. This was the eighth consecutive monthly decline due to plentiful supply.
• Vegetable oils fell 3.1% m/m and 23% y/y while sugar rose 1.3% m/m and 34.1% y/y, due to concerns re the impact of El Nino in Asia.

Source: MNI - Market News/FAO/Refinitiv