Global food inflation may have eased for the second month in a row in May from a record high reached in March, but the Food and Agriculture Organization (FAO) warned of a further tightening in food markets that may push food import bills toward historic peaks.
The United Nations agency said this as the rise in prices of staple foods in the Philippines jumped by double-digit rates in May.
With the food basket driving overall inflation in the Philippines to 5.4 percent last month, the Philippine Statistics Authority data showed prices of corn rose by 24.4 percent year-on-year, vegetables by 15.2 percent, and oils and fats, 13.6 percent.
At the same time, Moody’s Analytics observed that several Asia-Pacific countries have adopted food protectionist policies to secure domestic supply and keep a lid on food inflation. These include Indonesia (palm oil), India (sugar) and Malaysia (chicken).
“Russia’s invasion of Ukraine could hardly have come at a worse time for global food logistics given the pandemic still has supply chains clogged up,” Moody’s Analytics said in a commentary.
In the FAO’s latest Food Outlook report released on June 9, the United Nations agency said the global food import bill was on course to hit a new record of $1.8 trillion this year from about $1.3 billion in 2020.
However, higher prices and transport costs—rather than increasing shipment volumes— account for the bulk of the expected increase.
“Worryingly, many vulnerable countries are paying more but receiving less food,” the FAO said.
These alarming signs indicate “that importers will find it difficult to finance rising international costs, potentially heralding an end of their resilience to higher prices,” the report added.
The FAO further noted that while its Food Price Index was still near its all-time high and prices of several staples having registered a large increase in the past year, the agricultural sectors are exposed to supply limitations due to rising input costs—in particular for fertilizers and fuels—that could spur further food price rises.
In May, the FAO Food Price Index eased to an average of 157.4, a decrease of 0.9 point or 0.6 percent from 158.3 in April. The index hit an all-time high of 159.7 in March.
According to the National Economic and Development Authority, the government was addressing rising prices partly through Executive Order (EO) No. 171.
EO 171 extends the validity of EO 134 and 135, which temporarily lowered tariff rates for the importation of pork and rice.
The EO also reduces tariff rates on corn—which accounts for more than half of the total production cost of large-scale broiler and swine farms — as well as on coal, a significant fuel for electricity generation.