Inflation and the disruption of the food supply chain have caused global prices to shoot up. While this is happening, several products like coffee, avocado, and cooking oil are seeing lowered prices.
According to recent food price data, the prices for the mentioned items have gone down, albeit still relatively higher than their usual selling price.
Tridge, an agriculture commodities data group, recorded a price drop in Indian sunflower oil by 7% between May and June; the prices of palm oil also plunged by 12% in the same period.
In Vietnam, avocado prices went down by 5% in July; this is in comparison to the price of avocadoes before the Ukraine-Russian conflict started last February.
The largest producers of avocado, Mexico, Peru, and Colombia, have also declared a price drop, said Tridge.
Avocadoes sold wholesale in Mexico decreased by 27% in June and July. In Colombia, the price dropped almost by 40%.
However, the lowering of prices of avocados can be attributed to several factors. The most impactful is the overwhelming supply of Peruvian avocados in the market, which pressured sellers to lower the prices of avocadoes in the region and nearby areas.
Still in fear of recession
Inflation of prices leads consumers to cut down on their consumption of goods, even if the goods are necessary.
A spokesperson from Tridge, Minwoo Nam, said that consumers are afraid that a recession might happen and as a result, are resorting to lessened food consumption.
“There are multiple factors affecting the market. First of all, global recession fear is dampening the demand outlook,” he said.
“Also because prices went too high, [so] consumers are spending less or looking for substitutes,” Nam said. An example of this substitute is sunflower oil.
Tridge reveals that market participants and other traders have started their liquidations on hedge funds. But Nam said that inflation is not yet that apparent despite consumers adjusting their consumption of goods.
Nam added, “We can say concern for food inflation has somewhat abated, but the prices of many agri-products are still high compared to average years. Contractionary policies are certainly affecting the market.”
Disruption in the supply chain
Data shows that the supply of food and other products continues to remain low. This is amid increasing demand.
However, Nam commended several key efforts from governments and central banks to freeze prices and cope with the volatile market that is subject to several factors at the moment.
“It doesn’t seem likely that food prices suddenly fall into recessionary territory. However, the likelihood of fiercer inflation has decreased,” Nam said.
Further, Nam contends that the disruption in the supply chain is widely affecting the market, ultimately causing the prices of many products to go up.
The prices are almost nearing high records. However, the Food and Agricultura Organization of the United Nations recorded a fall in the food price index thrice in a row in June. The food index is a tracking feature of the organization that records the changes in global prices of several food commodities on a monthly basis.
The agency reported that the drop accounted for the waning prices of cereals, sugar, and vegetable oils. However, the prices of meat and dairy increased.
According to the FEO Cereal Price Index, prices of wheat decreased in June, lower than in May. However, the figure is still higher than the ones in the preceding year by 48.5%.
The outlook is becoming lighter after news got out that Russia and Ukraine will resume their grain exports after several months of being blocked over the Black Sea.
In the Asia-Pacific region, prices of commodities have moderately increased but not record-high, said Nomura chief economist Sonal Varma.
Many countries in the region will most likely see price surges in the second half of the year, said Nomura. This includes the Philippines, India, Singapore, and South Korea.