Inflation: food prices in May mark third straight month of rises

Cereals and dairy products lead the rise, although sugar and vegetable oils are down and meat is unchanged, reports the UN agency that monitors world food prices 
Queso a la venta en un mercado de Sao Paulo, Brasil - © FAO/Miguel Schincariol
Cheese for sale at a market in Sao Paulo, Brazil - © FAO/Miguel Schincariol
  1. Wheat leads the rise in cereal prices 
  2. Increased demand for dairy products 
  3. Vegetable oils fall 
  4. Sugar at lowest level since January 2023 

Food prices rose for the third consecutive month in May to put the UN Food and Agriculture Organisation's (FAO) food price index 1.1 points, or 0.9%, above April's level of 120.4 units. 

The FAO explained that while sugar and vegetable oil prices fell and meat prices remained stable, cereals and dairy products rose, causing the index to rise. 

The agency clarified that, despite being the third monthly rebound in a row, the indicator was 3.4% below that of May 2023 and 24.9% below the peak of 160.2 points reached in March 2022. 

Wheat leads the rise in cereal prices 

World cereal export prices rose 7.1 points, or 6.3%, from the previous month with wheat leading the way. The steep monthly rise was largely due to growing concerns about unfavourable growing conditions for the 2024 crops, which are likely to limit yields in some of the main producing areas of major exporting countries, particularly in Europe, North America and the Black Sea region.  In addition, damage to shipping infrastructure in the Black Sea exacerbated price pressures.  

Maize export prices also increased in May, reflecting production concerns in both Argentina (due to crop damage from the spread of a pest) and Brazil (due to unfavourable weather conditions), together with weak selling activity by farmers in Ukraine, amid reduced supply and strong global demand. 

As for other coarse grains, world prices for barley and sorghum also rose in May, as did rice. 

Increased demand for dairy products 

Dairy products, meanwhile, rose 2.3 points, up 1.8% from April, driven by increased demand from the retail and food service sectors for the northern summer holidays and market expectations of a decline in milk production in Western Europe and Oceania.   

In the meat markets, poultry and beef prices fell and pork and sheep prices rose, leaving the monthly indicator virtually unchanged from the previous month. 

Vegetable oils fall 

Of vegetable oils, FAO said the 3.1 point decline was due to lower palm oil prices, which more than offset higher prices for soybean, rapeseed and sunflower. International palm oil prices declined for the second consecutive month in May, as seasonal production in major producing countries in South-East Asia increased in the face of prolonged weakness in global import demand.  

By contrast, world soybean oil prices rebounded in May, generally supported by growing demand from the biofuels sector, particularly in Brazil. Sunflower and rapeseed oil prices also rose, mainly on account of seasonally lower exportable availabilities in the Black Sea region and the likelihood of tighter supplies in the coming season. 

Sugar at lowest level since January 2023 

Sugar, meanwhile, was down 9.5 points, or 7.5%, from April, making it three consecutive months of declines and standing at its lowest level since January 2023 as a good start to the new harvesting season in Brazil was reinforced by favourable weather conditions that contributed to an improved outlook for global supply.