Rising food prices are a concern but no reason for panic yet
- Impact Area
BY SARA GUSTAFSON, JOSEPH GLAUBER,MANUEL HERNÁNDEZ, DAVID LABORDE,BRENDAN RICE AND ROB VOS
Global food prices are on the rise. FAO’s Food Price Index indicates prices in international markets have risen by 40% from a year ago (May 2020). Prices of vegetable oils in particular have surged, showing an increase by almost 110% over the past year. Other commodity prices, like those for metals, oil, and other minerals prices have also shown sustained increases since mid-2020.
How concerned should we be? First, it is important to realize that the drastic year-on-year change in food prices reflects in part a “base effect,” i.e., a rebound from the 10-year low seen in May 2020, a few months into COVID-19 restrictive measures. Second, international food prices have not reached historical heights (Figure 1), although they have risen close to the levels reached during the food price spikes of 2007-2008 and 2011-2012. While food prices are high, for now there is no reason for panic.
Photo credit: Naim Fadil