Food Prices Soar to Three-Year High as Climate Shocks and War Disruptions Bite

Global food prices have reached their highest level since November 2022 due to adverse weather conditions, war disruptions in the Black Sea, and trade upheaval. The United Nations' Food and Agriculture Organisation (FAO) reported a 2.2% increase in its cereals price index in August, reaching a three-year high. The extreme heat and drought in Europe have affected maize and sugar beet harvests, while concerns over palm oil and sugar output in Asia were fueled by the anticipated El Nino.

The FAO's Food Price Index averaged 133.3 points in August, up from July's revised reading of 130.8. This is nearly 17% below a record peak from March 2022, after Russia's full-scale invasion of Ukraine. The index tracks monthly changes in a basket of internationally traded food commodities.

The war in the Black Sea has curtailed grain shipments from Russia and Ukraine, while the US-Iran conflict is straining flows of fertiliser for crops. FAO chief economist Maximo Torero warned that climate shocks, geopolitical tensions, and disrupted trade logistics are converging to tighten supply expectations.