After the wholesale price of food first saw a slump during the coronavirus pandemic, the global FAO Food Price Index showed a steep increase since the fall. Most recently, food around the world was 13.3 percent pricier than the 2014-2016 average, on which the index baseline of 100 points is calculated. The January figure is the highest of any month in more than six years.
While palm oil prices drove increases in the index in the fourth quarter of 2020, global cereal and sugar prices grew by just as much in January, together creating a level of food prices not seen in years. Dry weather and production disruptions due to COVID-19 coupled with high demand from India’s Diwali festival as well as from China led to the depletion of global palm oil inventories, which continues to drive up prices. For cereal and sugar, worsening crop prospects in the U.S. and the EU increased prices, especially for maize. Drier climate in South America and a high demand for maize in China also did their parts in driving up prices.