Global food prices rose for the 12th month in a row in May, up nearly 40% year over year, according to the United Nations’ food price index. Average prices are at their highest point in nearly a decade.
Last month was also the sharpest monthly rise in average food prices in over a decade, spiking 4.8% from April to May. Abdolreza Abbassian, senior economist for the UN Food and Agriculture Organization, says surprising demand for corn in China, an ongoing drought in Brazil and increased global use of vegetable oils, sugar and cereals has caused prices to surge rapidly around the globe. “The demand, really I would say, is almost surprising everyone,” Abbassian told CNN Business. “This demand requires a strong supply response.” Global inflation is raising prices on virtually everything, from food to steel to lumber and energy. In countries that belong to the Organization for Economic Cooperation and Development, prices surged in April to the highest rate since 2008.
Higher usage of bio diesels and moderate global price increases for meat and dairy products also contributed to the steep rise in global food prices. The UN report said international palm oil quotations reached their highest level since February 2011 due to slow production growth of palm oil in Southeast Asian countries and rising global import needs are keeping inventories low in leading exporting nations. “The demand has been quite robust in the vegetable oil sector in general,” Abbassian said. Brazil has cut back on its corn and sugar experts amid its drought, according to Abbassian, who said speculation over how much corn Brazil and farmers in the US might produce this summer and early fall is a point of concern for food supply administrators and economists.