Although food prices rose in June for the third consecutive month, they are unlikely to be enough to pay for supermarket bills for several more months.
The most recent United Nations Food Prices Index revealed that key wholesale food commodity prices dropped by 2.3% in June, compared to May.
As a result, the price of cereals fell and edible oils also declined after the Russia-Ukraine conflict.
However, prices overall are still 23% higher than June 2021.
The UN Food Prices Index measures the prices of the most traded food commodities around the globe. It includes the average price of cereals, vegetable oils, milk, meat, and sugar.
The Russian invasion of Ukraine and fears about weather and strong global demand, as well as the rising costs of transport and production, had pushed up prices.
Maximo Torero cullen, chief economist at Food and Agriculture Organisation, stated that "the factors that drove global price rises in the first instance are still at work."
According to the latest data, last month's cereal prices dropped by 4.1% and edible oil prices declined by 7.6%. This is because alternative sources have been discovered and that harvests elsewhere are improving. The price of sugar also dropped, but milk and meat prices continued to climb.
One of the main factors driving up supermarket prices was the rise in food commodity prices around the world. This in turn led to inflation in the UK reaching a 40-year high at 9.1% in the twelve months to May.
The Bank of England increased UK interest rates by 1% to 1.25% in an effort to slow the rate of price inflation.
The disruption caused by the pandemic had already led to food prices rising at the beginning of 2022. However, it was Russia's invasion in Ukraine that caused them to rise to unimaginable levels.
Russia and Ukraine only account for 2% of global trade. But it is their key role as key suppliers of staples, such as grain, sunflower oil, and fertilizer that makes this war visible on plates thousands of kilometers away. Although prices for cereals and oils have declined in recent months, alternative sources increased, and prices across all commodity categories rose by 23% compared with a year ago. The delay of six months before wholesale prices affect shop shelves means that households will feel more pain in the near term. These commodity prices can be volatile and there may be more surprises in the future.
According to the UN, 150 million more people are now hungry since Covid 19, while the war could add another 40 million. Economists warn that even if food price inflation slows down, a return to a time of relatively inexpensive food is unlikely.
The boss of the World Trade Organization, last month, warned that a food shortage triggered by the Ukraine war could continue for many years without intervention.
Ngozi Okonjo Iweala, WTO director general, stated to the BBC that droughts in wheat and fertilizer could make it difficult for African countries.
Ukraine is a major exporter of wheat to the world, accounting for 9% of the total global market. It is also responsible for 42% of the global sunflower oil market and 16% world maize.
