Food Prices Fell in August, But Rice Prices Hit 15-Year High

By Yusuf Khan

Food prices fell in August as a strong supply of wheat, corn and other key foodstuffs helped to lower global food commodity prices, but risks remain for rice, the cost of which jumped after the introduction of Indian export restrictions, the Food and Agriculture Organization of the United Nations said Friday.

The UN FAO's food price index, which tracks global prices for a basket of staple foods, averaged 121.4 points in August, down 2.1% from July, putting prices 24% lower than the March 2022 peak. The Rome-based body said that much of the decline was led by lower dairy and vegetable oil prices helping to ease inflation worries for policy makers.

That said, the UN FAO highlighted skyrocketing prices for rice, with its price index up 9.8% during the month--hitting a 15-year high--following significant trade disruptions after India introduced a ban on exports for Indica white rice.

The country is the world's largest rice exporter and uncertainty about the ban's duration and concerns over export restrictions caused "supply-chain actors to hold on to stocks, renegotiate contracts or stop making price offers, thereby limiting most trade to small volumes and previously concluded sales," the report said.

Outside of rice, cereal prices overall were down 0.7% from July to , with wheat down 3.8% and coarse grains such as corn down 3.4% amid strong supply from exporting countries such as Russia and Brazil, respectively.

Vegetable oil prices fell 3.1% in August to an index of 125.8, led by falls in sunflower oil, with weakening demand and strong supply of other vegetable oils pushing prices lower. The August decline, however, comes off the back of a 12% hike in July, putting prices roughly just below where they were in April.

Prices for sugar rose 1.3% in August, some 34.1% higher than a year ago. The FAO said that most of this has been led by worries over poor harvest triggered by the El Nino weather phenomenon.

"In India, below-average rains in August were detrimental to sugarcane crop development, while persistent dry weather conditions in Thailand are expected to negatively affect the 2023-24 sugar production."

Elsewhere, dairy prices fell 4% from July, marking the eighth consecutive month of decline and putting prices 22% lower than a year ago. Meat prices were down 3% to 114.6 points in August, led by falling prices for sheep and chicken.

Write to Yusuf Khan at