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The FAO Food Price Index, which measures the monthly change in international prices of a basket of food commodities, declined in December 2023 compared to the previous month,driven by a sharp drop in international sugar prices, the Food and Agriculture Organisation of the United Nations reported.
According to the FAO, the Food Price Index for December averaged 118.5 points in December, down 1.5 percent from November and down 10.1 per cent from December 2022. For 2023 as a whole, the index was 13.7 per cent lower than the average value over the preceding year, with only the international sugar price index higher over the period.
The FAO Cereal Price Index, which tracks prices of wheat, maize, rice, and barley, rose by 1.5 percent in December, as the prices of all four cereals increased. This was partially due to logistical disruptions caused by extreme weather events in major exporting countries, which limited the supply of cereals.
 Looking at the FAO Food Price Index over the course of the year, the overall trend was downward, with the index down 15.4 per cent from the average for 2022. The All Rice Price Index, a subset of the FAO Cereal Price Index, registered a significant 21 percent increase in price compared to 2022. This was driven by concerns about the impact of El Niño on rice production and restrictions on rice exports by India.
On the other hand, the FAO Vegetable Oil Price Index, which tracks the prices of palm, soy, rapeseed, and sunflower seed oils, saw a 1.4 per cent decline in December. For the year as a whole, the Vegetable Oil Price Index was 32.7 percent lower than in 2022. This decline was driven by a variety of factors, including a decline in global demand for vegetable oils, an increase in supplies, and reduced import demand from key markets.
The FAO Sugar Price Index, which monitors the price of raw sugar, declined by 16.6 per cent in December, reaching its lowest level in nine months. However, the index was still 14.9 per cent higher than in December of the previous year. The significant decrease was primarily due to strong sugar production in Brazil and reduced demand for sugarcane to produce ethanol in India.
The FAO Meat Price Index also saw a 1.0 percent decrease in December compared to the previous month, its fifth consecutive monthly decline. This brought the index to a level 1.8 percent below the level recorded in December 2022. This decline was attributed to weak import demand for pig meat from Asia, as well as a slowdown in regional buying interest for bovine and poultry meat, despite ample supplies in major producing regions.
The FAO Dairy Price Index, which tracks the prices of dairy products, bucked the trend of the other indices and saw a 1.6 per cent increase in December. Despite this increase, the index remained 16.1 percent below its level in December 2022. This was mainly driven by an increase in the prices of butter and cheese, as a result of strong internal sales in Western Europe ahead of the holiday season. Meanwhile, strong global import demand led to an increase in the prices of whole milk powders
