Food Price Inflation Soars as Drought and Conflicts Bite
Food price inflation accelerated in August due to drought and conflicts impacting commodity markets. The UN's Food and Agricultural Organization (FAO) reported a 1.9% increase in its food price index from July, with prices rising by 2.5% compared to the same period last year.
The FAO attributed the surge in prices to exceptional heat in Europe leading to lower crop yields and the El Nino climate phenomenon threatening production in Asia. Sugar prices jumped 11.9%, reaching their highest level since June 2023, while wheat prices rose by 15% from last year due to disruptions to Black Sea export logistics linked to Russia's invasion of Ukraine.
The closure of the Strait of Hormuz also contributed to higher prices for maize, which climbed 2.5%. The FAO noted that concerns over input supplies due to the closure have additional support to maize prices.