Global food prices soared 1.9% in August to a four-year high, and the impact of a new round of inflation may hit in the future

The Zhitong Finance App learned that global food prices climbed to the highest level since the end of 2022 in August due to escalating geopolitical tension and frequent extreme weather exacerbating supply concerns in major production areas. According to the latest report released by the Food and Agriculture Organization of the United Nations (FAO) on Friday, the global food price index rose 1.9% in August compared to July. The increase was mainly led by the prices of grains, sugar and dairy products.

Currently, the global food market is being plagued by multiple factors such as supply, trade, and weather, and farmers are putting new pressure on top of already high investment costs. Since mid-July, tension in the Black Sea granary region has continued to escalate. Russia is preparing to step up its attack on Ukraine, while Ukrainian farmers are struggling to export grain. Meanwhile, hopes for a peace agreement between the US and Iran are fading, and Europe's poor harvest may make it more dependent on imports, thereby increasing global supply competition.

Looking at segmented data, global wheat prices rose 2.6% month-on-month in August, and sugar prices soared 11.9%. It should be pointed out that the FAO Price Index tracks food commodity prices in international trade, so it will still take some time for changes to be transmitted to terminal retail shelves.

Other warning signs are also surfacing. Futures prices for key staple food crops such as wheat and corn have climbed to high levels for many years. The Bloomberg Agricultural Spot Index (tracking 10 major agricultural products) rose more than 13% in August, the biggest monthly increase since July 2012.

Furthermore, the unusually strong El Niño phenomenon means that weather risks will be difficult to subside in the short term, and the global food market will still be vulnerable to a new round of inflationary shocks.