Food Prices Surge in February Amid Rising Inflation

The FAO Food Price Index rose in February, driven by increases in sugar, dairy products, and vegetable oils. In Mexico, lemon, banana, and eggs saw price hikes during the same period.

In February, the FAO index averaged 127.1 points, reflecting a monthly increase of 1.6% and an annual rise of 8.2%. This surge was largely driven by sugar prices, which soared 6.6% month-on-month due to concerns over a tighter global supply for the 2024-2025 season. The increase was partly attributed to expectations of lower production in India and worries about the effects of drought in Brazil.

Dairy products recorded a 4% increase from January and a 23.2% rise compared to 2024. International cheese prices climbed for the third consecutive month, up 4.7%, driven by strong import demand. Additionally, whole milk powder prices rose by 4.4% and butter costs rebounded 2.6%, as seasonal declines in milk production in Oceania coincided with strong domestic and international demand.

Vegetable oil prices rose by 2% monthly and 29.1% annually. This increase was driven by higher quotations for palm, rapeseed, soybean, and sunflower oils, largely due to seasonal production declines in Southeast Asia. Furthermore, global soybean oil prices rose due to strong worldwide demand, particularly from the food sector. As for sunflower and rapeseed oils, prices were mainly supported by concerns over a potential supply shortage in the coming months.

Cereal prices saw an increase of 0.7% from January, remaining below their February 2024 levels. Wheat export prices rose due to tighter domestic supply in Russia, which restricted export volumes and shifted demand to other suppliers. Meanwhile, corn prices continued their upward trend, primarily due to seasonal supply reductions in Brazil, worsening crop conditions in Argentina, and strong export demand in the United States. Additionally, barley and sorghum prices also rose. In contrast, rice prices fell by 6.8% due to weak import demand.

Meat prices decreased slightly by 0.1% from January but remained 4.8% higher than a year ago. Poultry prices declined due to abundant supply, mainly from Brazil, despite ongoing avian flu outbreaks in other producing countries. Likewise, pork prices dropped due to falling quotations in the European Union. On the other hand, lamb prices rose as a result of strong global demand.

Inflation in Mexico

Mexico’s Consumer Price Index accelerated to 3.77% annually in February after slowing for the previous three months. According to INEGI, this was partly due to rising agricultural prices. In February, lemon prices surged by 16.31%, selling at MX$29/kg (US$1.42); banana prices increased by 14.05% to MX$27.9/kg; and egg prices rose by 5.71%, reaching MX$52/kg.

Similarly, beef prices rose by 2.24% during the same period. Poultry prices had the greatest impact in the northern region, as INEGI reports that the Consumer Price Index in the Monterrey metropolitan area increased by 18.8% annually in the first half of February. Specialists attribute this price surge to the continued effects of avian influenza in the United States. The outbreak, which began affecting farms in February 2022, has led to the loss of about 160 million birds, significantly reducing production and export volumes.

Some essential food items saw notable price drops. Tomato prices fell by 29.12%, followed by nopales at 15.30%, watermelon at 14.40%, onion at 14.17%, grapes at 9.64%, zucchini at 7.75%, carrots at 7.32%, green tomatoes at 5.76%, and potatoes at 5.18%.