Global food prices jump to highest since 2022 as risks increase

Global food prices climbed in August to the highest since the end of 2022, as escalating geopolitical tensions and extreme weather deepen concerns over supplies from key producing regions.

The United Nations’ index of food-commodity prices climbed 1.9% from July, led by grains, sugar and dairy, according to a report from the Food and Agriculture Organisation on Friday.** **

Global food markets are preoccupied by a mix of supply, trade and weather issues, adding to the strain on farmers already battered by higher input costs. Tensions in the Black Sea breadbasket have escalated since mid-July, with Russia preparing to step up attacks on Ukraine, where farmers are struggling to export grain.

Hopes are also dimming for a peace deal between the US and Iran, while poor harvests in Europe could leave the continent more reliant on imports, potentially intensifying competition for supplies.

Global wheat prices rose 2.6% in August, while sugar jumped 11.9%. The FAO index tracks internationally traded food commodities, meaning it can take time for price changes to reach supermarket shelves.

Other warning signs are also emerging. Futures of key crop staples like wheat and corn have climbed to multi-year highs. The Bloomberg Agriculture Spot Index, which tracks 10 major products, rose more than 13% in August, its steepest gain since July 2012.

The threat of an unusually powerful El Niño means weather risks are unlikely to fade anytime soon, keeping global food markets vulnerable to another inflationary shock.

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