Prices Fall, but 2021 Closes as Highest Index in 10 Years.
Prices for all sub-indices save for dairy fell last month. The Food Price Index averaged 133.7 points in December, a .9% drop from November, but still 23.1% higher than the same time last year. At an average of 125.7 points, a 28.1% increase year-on-year, 2021 stands as the highest in a decade.
Cereal prices were virtually unchanged in December, averaging 140.5 points, just .6% below November. Slower demand and increased supply from harvests in the southern hemisphere helped to bring wheat export prices down. Firmer prices in maize were due to higher demand and concerns over the dry conditions in Brazil. Sorghum prices were up, partly due to stronger maize prices. Barley prices fell. Rice eased up as demand relapsed and currencies weakened against the U.S. dollar.
Vegetable Oil prices averaged 178.5 points, a 3.3% decrease month-on-month. Palm and sunflower oil prices showed weaker figures. Soy and rapeseed values remained virtually unchanged. Concerns over the growing number of Covid-19 cases led to lower global import demand of palm oil, helping to bring the price down for the month. Strong demand in India helped to firm up prices of soy. Rapeseed prices were buoyed by a persistent global supply tightness.
Dairy prices were the only ones to rise in December, moving up to 128.2 points, a 1.8% month-on-month increase, but still 17.4% higher than the same time last year. Low supply from Western Europe and Oceania coupled with higher global demand led to higher milk powder and butter prices. That lower supply out of Western Europe had the opposite effect on cheese prices, as producers chose cheese production over other dairy alternatives.
Meat prices experienced a slight uptick in December, averaging 111.3 points, but were still up a considerable 17.4% year-on-year. Poultry and ovine prices fell, the former because of increased global exportable supplies and the latter due to increased supplies out of Oceania. Pork prices fell slightly for the sixth month in a row as increased pre-Christmas sales in major countries balanced out the protracted decline in Chinese imports.
Sugar prices dropped by a small measure, just 3.1%, averaging 116.4 points. That marks a five-month low. Resumption of containment measures due to the Omicron variant and a weaker Brazilian Real were two main reasons for the decline, along with lower ethanol prices.
As stated in the beginning of this report, 2021 was the highest food price index in a decade. Of all the sub-indices, oil stood out as it marked an all-time annual high. Averaging 164.8 points, it was 65.8% higher than 2020’s average. As a result, oil prices were the most recognizable increases at the retail level. Also recognizable were wheat prices, up 31.3% in 2021, due mainly to the classic economic duo of high demand among short supply. Rice was the only major grain to experience a decline, falling 4% from 2020.
Meat and dairy prices, although ostensibly higher at the retail level this past year, were relatively low compared to cereals and oils. Up 12.7% and 16.9%, respectively, they came nowhere near the level that oils achieved. Among the meats, it was sheep and lamb that saw the sharpest increase. The rise in dairy prices came down to the fact that the leading producing regions could not keep up with the sustained demand, principally from Asia.
The past year was rough for consumers. This report only shows one side of what was experienced by most. Inflation hit 7.1% last year and it was felt on everything from food to furniture. We can only hope that the coming year will see that inflation decrease. Happy New Year!
The next report from the FAO is due out February 3rd. Come back next month to see how the first month of 2022 fared.