World Food Prices Hit Record High in 2022

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World food prices fell for a ninth month in a row in December but hit their highest level on record for the full year in 2022, UN data showed Friday. online news

Food prices soared to a monthly record high in March after Russia invaded agricultural powerhouse Ukraine, a major supplier of wheat and cooking oil to the world.

But prices have dropped since then, with more relief brought by a deal brokered by Turkey and the United Nations in July that lifted a Russian naval blockade on Ukrainian grain exports.

The Food and Agriculture Organization said Friday its price index, which tracks the monthly change in international prices of a basket of food commodities, fell to 132.4 points in December, a 1.9 percent drop from November.

It was also one percent lower than in December 2021.

But the index was 14.3 percent higher overall in 2022 compared to the previous year as it reached an all-time high of 143.7 points.

“Calmer food commodity prices are welcome after two very volatile years,” FAO chief economist Maximo Torero said in a statement.

“It is important to remain vigilant and keep a strong focus on mitigating global food insecurity given that world food prices remain at elevated levels,” he said.

Torero said many staples are near record highs, with prices of rice rising and “still many risks associated with future supplies”.

World prices of maize were 24.8 percent higher on average in 2022 than in 2021, according to the FAO. Wheat was 15.6 percent more expensive.

But maize prices fell in December, mostly due to “strong competition” from Brazil, the FAO said.

Wheat was also down for the month “as ongoing harvests in the southern hemisphere boosted supplies and competition among exporters remained strong”.

The FAO’s vegetable oil price index reached a new record high in 2022 but fell 6.7 percent month-on-month in December to its lowest level since February 2021.

Dairy and meat prices hit their highest levels since 1990, the agency said. While meat prices fell 1.2 percent in December, those of dairy rose 1.1 percent for the month.

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Notes from APS Radio News

From the early part of March 2020 to April 15, 2022, the US Federal Reserve had been increasing its holdings by nearly $5 trillion dollars.

It did this each month of that period by buying billions of dollars of corporation and government bonds, in effect, infusing massive amounts of money into the economy.

And, as the FRED graph shows, it did so at rapid rate or at a high rate of velocity.

Economists say that when massive amoutns of fiat money are infused into the economy at high rates of velocity, the likelihood of noticeably higher rates of inflation is made greater.

A number of other central banks followed a similar policy.

For example, between late February 2020, even days before the media started fixating on the virus thingy, and March of this year, the European Central Bank embarked on its own version of monetary expansion.

During that period, the ECB increased its holdings by over 5 trillion euros.

The Bank of Japan also increased its holdings.

Between February of 2020 and earlier this year, it had increased its holding by a few hundred trillion Yen.

For a number of years, including the Bank of Japan, major central banks have kept their interest rates low.

For its part, the Bank of Japan kept its interest rates at negative rates, meaning that depositors had to pay banks to hold their money.

During and before the pandemic, major corporations had increased the number of mergers and acquisitions, as those entities were able to make their purchases using inexpensive money and higher stock valuations.

The other part of the equation was that of supply.

As a result of lockdowns, many small and medium-sized businesses were closed.

Shipping ports had lost workers, and truck drivers going to those ports had to wait in long lines, as a result.

In effect, well before Russia’s invasion of Ukraine, shortages of various goods and services developed.

The invasion and sanctions imposed have aggravated shortages of commodities like petroleum and grain.

And there have been instances of price gouging.