(MENAFN) The latest data from the OECD reveals a significant downtrend in food inflation across 38 industrialized countries, marking its lowest point since pre-war levels in Ukraine. The annual change in consumer food prices dropped to 5.3 percent in February, a notable decrease from the previous month's 6.2 percent and a considerable decline from its peak of 16.2 percent recorded in November 2022.
The surge in food prices observed in 2022, primarily attributed to heightened energy costs and reduced trade stemming from the conflict in Ukraine, has gradually abated. Additionally, unforeseen factors such as severe droughts and disruptions in supply chains due to the COVID-19 pandemic contributed to the inflationary pressures experienced by consumers.
These high prices have significantly impacted global food security, with an estimated 333 million individuals facing acute food insecurity in 2023, according to the World Food Programme. Reflecting on the severity of the situation, Carlos Mera, head of agricultural commodities at Rabobank, described it as witnessing some of the most pronounced cases of food price inflation.
However, there is a noticeable shift in the landscape of agricultural commodities, with prices experiencing a substantial decline over the past two years since reaching their peak post the Ukrainian conflict. This downward trajectory in prices is exerting a deflationary influence, even at the retail level, according to Mera.
A convergence of factors, including the normalization of supply chains, a decrease in gas prices to historically typical levels, and the resumption of Ukrainian grain exports via the Black Sea corridor, have collectively contributed to easing inflationary pressures. Economist Thomas Vieladyk of investment firm T. Rowe Price suggests that disentangling these factors indicates a sustained slowdown in global food inflation moving forward.
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