Food Price Index Rises to a New All-Time High. How to Deal With It

The FAO reports Food Price Index Rises to a New All-Time High in February.

Year-Over-Year Percent Change 

Food Price Details

• The FAO Food Price Index (FFPI) averaged 140.7 points in February 2022, up 5.3 points (3.9 percent) from January and as much as 24.1 points (20.7 percent) above its level a year ago. This represents a new all-time high, exceeding the previous top of February 2011 by 3.1 points. The February rise was led by large increases in vegetable oil and dairy price sub-indices. Cereals and meat prices were also up, while the sugar price sub-index fell for the third consecutive month.
• The FAO Cereal Price Index averaged 144.8 points in February, up 4.2 points (3.0 percent) from January and 18.7 points (14.8 percent) from one year ago. In February, prices of all major cereals increased from their respective values last month. World wheat prices increased by 2.1 percent, largely reflecting new global supply uncertainties amidst disruptions in the Black Sea region that could potentially hinder exports from Ukraine and the Russian Federation, two major wheat exporters. Coarse grain export prices also rose by 4.7 percent. World maize prices increased by 5.1 percent month-on-month, underpinned by a combination of continued crop condition concerns in Argentina and Brazil, rising wheat prices, and uncertainty regarding maize exports from Ukraine, a major exporter. Among other coarse grains, both sorghum and barley export prices firmed month-on-month as well, gaining 5.9 and 2.7 percent, respectively. International rice prices increased by 1.1 percent in February, primarily sustained by the appreciation of currencies of some exporters against the US dollar and strong demand for fragrant rice from Near East Asian buyers.
• The FAO Vegetable Oil Price Index averaged 201.7 points in February, up 15.8 points (8.5 percent) month-on-month and marking a new record high. The continued price strength mostly stemmed from rising palm, soy, and sunflower oil prices. In February, international palm oil prices increased for the second consecutive month due to the sustained global import demand that coincided with reduced export availabilities from Indonesia, the world’s leading palm oil exporter. In the meantime, world soyoil values continued to rise on deteriorating soybean production prospects in South America. International sunflower oil prices also increased markedly, underpinned by concerns over the disruptions in the Black Sea region, which could potentially lower exports. Surging crude oil prices also lent support to the vegetable oil complex.
• The FAO Dairy Price Index averaged 141.1 points in February, up 8.5 points (6.4 percent) from January, marking the sixth successive monthly increase and placing the index 28.0 points (24.8 percent) above its value in the corresponding month last year. In February, international quotations for all dairy products represented in the index firmed, underpinned by the continued tightening of global markets on the back of lower than expected milk supplies in Western Europe and Oceania. Besides tight global supplies, persistent import demand, especially from North Asia and the Middle East, led to steep increases in whole milk powder and cheese price quotations. International skim milk powder prices rose significantly as well, reflecting a lower volume of milk deliveries for drying plants in Western Europe, while butter prices received a boost from high demand for spot supplies.
• The FAO Meat Price Index* averaged 112.8 points in February, up 1.2 points (1.1 percent) month-on-month and 15.0 points (15.3 percent) from its level a year ago. In February, international bovine meat quotations reached a new record high, driven by strong global import demand amidst tight supplies of slaughter-ready cattle in Brazil and high demand for herd rebuilding in Australia. Pig meat prices also edged up, reflecting increased internal demand and scaled-back hog supplies in the European Union and the United States of America. Quotations for ovine meat weakened for the fourth consecutive month due to high exportable supplies in Oceania. Meanwhile, poultry meat prices fell slightly due to reduced imports by China following the end of the Spring Festival and lower domestic demand in Brazil.
• The FAO Sugar Price Index averaged 110.6 points in February, down 2.1 points (1.9 percent) from January, marking the third consecutive monthly decline and reaching its lowest level since last July. Favourable production prospects in major exporting countries, notably India and Thailand, coupled with improved growing conditions in Brazil continued to weigh on world sugar prices. Ethanol prices in Brazil declined for the third successive month in February on the back of reduced domestic demand, exerting further downward pressure on world sugar prices. However, the strengthening of the Brazilian Real against the US Dollar, which tends to restrain shipments from Brazil, the world’s largest sugar exporter, prevented more substantial sugar price declines.

Bloomberg Suggestion – Eat More Lentils 

Bloomberg has an amusing as well as questionable post: Inflation Stings Most If You Earn Less Than $300K. Here’s How to Deal. 

Here are some of article’s suggestions, ideas, and questions.

• Do you really need that extra car?
• To deal with gas prices, it’s worth reconsidering public transportation if it’s an option where you live. Fares are up about 8% compared with 38% for gasoline. 
• Though your palate may not be used to it, tasty meat substitutes include vegetables (where prices are up a little over 4%, or lentils and beans, which are up about 9%).
• If you’re one of the many Americans who became a new pet owner during the pandemic, you might want to rethink those costly pet medical needs. It may sound harsh, but researchers actually don’t recommend pet chemotherapy — which can cost up to $10,000 — for ethical reasons.
• And stay away from buying in bulk — you usually don’t save any money by buying more.

Mish #1 Suggestion – Get a Freezer!

I strongly disagree with that last point above from the Bloomberg article. Indeed, I think buying in bulk is the number one thing you can do, provided you can properly store it. 

That leads me to a suggestion I have mentioned before: Get a freezer! And the bigger your family, the bigger the freezer you should get. 

Then buy meat only when it’s on sale, and buy as much as you can store. Buying on sale is another easy point the Bloomberg author missed. 

Meat prices are often 50% higher when not on sale. And given the cost of steak, chicken and pork, that is an enormous saving. 

Butter freezes well. Cheese will last a very long time properly wrapped once open and indefinitely if sealed in wax. 

If paper towels or toilet paper are on sale, stock up. You don’t even need a freezer. The same applies to pasta and other dried foods.

Costco whole baked chickens are a loss leader. You can’t buy chicken yourself and bake it cheaper. If a Costco is near you, get a membership.

Eat more lentils? No thanks! Shop smarter, buy what’s on sale, and get a freezer.

Reader Tip

One of my readers offered this tip: Get a vacuum sealer, and use it before packing your freezer. The difference it makes in food taste will be worth it.

I replied:

The bigger the freezer and the more you buy, the more you need that idea. But freezer paper works very well if you know how to wrap.

I grew up in a family of 6 with a huge freezer. Mom bought what was on sale and dad dated and stored it. Use the oldest packages first.

So, don’t forget to label and date what you store.

What Can the Fed Do About the Price of Food, Medicine, Gasoline, or Rent?

If you think the Fed can tackle this issue, you are mistaken. For discussion, please consider What Can the Fed Do About the Price of Food, Medicine, Gasoline, or Rent?

Also note, Biden Doing Everything Possible to Drive Up the Price of Oil, Some of It’s Illegal

This post originated at MishTalk.Com.

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