Global food prices post biggest annual drop since 2015

Global food prices posted the biggest annual drop since 2015, amid signs that lower wholesale food prices are starting to feed through to supermarket shelves.

An index of food-commodity prices created by the United Nations' Food and Agriculture Organization fell about 10% in 2023, according to data released on Friday.

While the index tracks raw commodity costs rather than retail prices, the steep drop could indicate potential relief on the way for consumers, as food prices ease from a 2022 peak that followed Russia's invasion of Ukraine and contributed to a cost-of-living crisis in countries across the world.

Corn and wheat futures prices saw their biggest annual declines in a decade last year, as supply concerns faded. Futures prices for hogs and palm oil also posted big declines.

While the UN's index is now at the lowest level since February 2021, lower wholesale costs have been taking some time to percolate down to supermarkets and consumers. However, there are signs that food inflation is cooling. The indicator fell sharply in the UK last month to to the lowest since June 2022, while food, fuel and alcohol price rises have also slowed in New Zealand. In Pakistan, bigger production is likely to help slow food price rises.

The FAO grain index fell more than 16% compared to this time last year, despite increasing slightly last month due to weather-related disruption in shipments from key exporters. In December, falls in the price indices for sugar, vegetable oils and meat "more than offset increases in dairy products and cereal" according to the organization.

For December, the index of food-commodity prices was 1.5% lower from a month ago.