Suppliers have been affected by disruptions to production, labor, and transport during the pandemic. Concerns are growing about broader inflation and how higher grocery bills will impact the world’s economic recovery.
According to a written statement from FAO, the FAO Food Price Index, which averaged 127.1 points in May, increased by 4.8 percent compared to the previous month and by 39.7 percent compared to the same month of the previous year. Accordingly, the increase in vegetable oil, sugar, and grain prices caused the index to reach its highest value since September 2011. It was nominally 7.6 percent below from all-time high but still, it is the highest of this decade.
The increased costs are a result of renewed demand in some countries and a backlog of low production. Market and supply disruptions due to restrictions on movement have created local shortages and higher prices.
Experts had warned that high demand and low production would lead to rising inflation as economies exit lockdown.
The FAO Grain Price Index also increased by 6 percent on a monthly basis. The FAO Vegetable Oil Price Index rose 7.8 percent mainly due to the rise in palm, soy and rapeseed oil prices. The FAO Sugar Price Index also rose 6.8% amid harvest delays and concerns about declining crop yields in the world’s largest sugar exporter, Brazil.