International Food Prices Drop in August: FAO

The UN Food and Agriculture Organization (FAO) reported that international food prices dropped in August, thanks to the reduction in vegetable oils and cereals costs. However, in Mexico, the cost of basic food products, such as tomatoes and milk, continue to increase. 

According to FAO’s Food Price Index, international prices of globally traded food products showed a monthly reduction of 2.1% in August and a decrease of 24% compared to the highest price reached in March 2022. Specifically, the price of vegetable oils decreased by 3.1% in August, partially reversing the significant 12.15% increase of July. Meanwhile, the FAO cereal price index decreased by 0.7%, following the rise it experienced in July due to the end of the Black Sea agreement.

Wheat prices fell by 3.8% during this period, amid higher seasonal availability from several major exporters. Meanwhile, international prices for other grains dropped by 3.4% given sufficient global corn supplies from an unprecedented harvest in Brazil and the beginning of the harvest in the US. 

On the other hand, following India's ban on white rice exports, being this country the world's largest rice exporter, rice prices increased by 9.8%, reaching their highest level in 15 years. Likewise, sugar prices rose by 1.3% compared to July, resulting in a year-on-year increase of 34.1%. 

According to a recent report, FAO expects the world cereal production in 2023 to reach 2,815 million t, matching 2021’s production record. Moreover, FAO's dairy product price index decreased by 4% and meat prices fell by 3%.

At the national level, inflation in Mexico continues to slow down. According to INEGI, inflation stood at 4.64% in August, marking seven consecutive months of deceleration. However, food prices are still a burden to Mexican households. The Minimum Consumption Basket Price Index, which evaluates the prices of 176 products and services that make up the food and non-food baskets of the National Council for the Evaluation of Social Development Policy (CONEVAL), saw a monthly increase of 0.75% and an annual rise of 4.16%.

In August, tomatoes recorded an increase of 31.73%, onions rose by 30.74% and green tomatoes went up by 15.07%. Furthermore, the Agricultural Markets Consulting Group (GCMA) reported that prices of animal proteins have grown over the past year. A kilogram of condensed milk saw an 8.6% increase from 2022 to 2023. Similarly, the price of a kilogram of bacon rose by 7%, pasteurized milk increased by 5.8% and powdered milk by 2.8%. Meanwhile GCMA noted that beef, sausage and chicken meat prices ticked up by 2%.