The United Nations Food and Agriculture Organization (FAO) has recently announced that food prices fell in 2023, the most significant drop since 2015.
The FAO reported a 13.7 percent total drop in world food commodity prices last year. Most significantly, the price of vegetable oil fell by 32.7 percent. Cereal prices also dropped by 15.4 percent, “reflecting [a] well supplied global market,” outlines the FAO’s statement.
However, it is essential to note that the FAO index measures only commodity market prices, which represent one part of the final cost of the products and can take quite a while to translate to supermarket shelves. “The fact that food commodity prices drop doesn’t necessarily mean a drop in food prices,” explains economist and food industry specialist Bruno Parmentier. “Flour only represents four to eight per cent of the price of a baguette. Most of it is the cost of labour and production costs,” such as energy, water, and rent, Parmentier adds. Ultimately, although the difference may be relatively small, there is still a very likely drop in shelf price due to the drop in commodity market price!