Global food prices soar due to Middle East conflict

Key information

• Global food prices rose in March due to rising energy and transportation costs, exacerbated by conflict in the Middle East.
• Supply chain disruptions linked to the Iran conflict are driving up food prices globally.
• The rise in the Food and Agriculture Organization of the United Nations (FAO) food index reflects persistent food inflation, with the conflict impacting the supply of energy, fertilizer and essential foodstuffs.

Global food prices saw an upward trend in March, mainly due to escalating energy costs and increased transportation costs, both influenced by the ongoing conflict in the Middle East.

FAO food index rises

The Food and Agriculture Organization of the United Nations (FAO) said its index, which tracks global food prices, averaged 128.5 points in March, up 3 points from February’s figures. This marks the second straight month of rising prices for this index, which tracks the costs of grains, sugar, meat, dairy and vegetable oils.

Supply chain disruptions

The FAO attributes this upward trend to disruptions caused by the conflict in Iran, which have rippled through global food supply chains. Although the index focuses on commodity prices rather than retail prices, this rise suggests that food inflation could continue. This is largely due to the impact of the conflict on energy and fertilizer costs, as well as the disruption of shipments of grain and essential goods passing through the Strait of Hormuz.

The prices of vegetable oil and sugar recorded the largest increases in March. However, price increases were also observed for meat, dairy products and cereals.

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