Slump in world food prices continues to gather pace

World food prices fell sharply in August, dragged down by ample supplies and external factors, including a slump in energy prices and concerns about an economic slowdown in China, the United Nations food agency said yesterday.

The Food and Agriculture Organisation’s (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 155.7 in August, down 8.5 points, or 5.2% from July.

The FAO said this was the sharpest monthly drop since December, 2008, but August’s reading does not break through another historic level, after the index hit a near six-year low in July.

Most global commodity prices have been heading south, partly due to fears of a hard economic landing in China and a strong US dollar.

A combination of these factors and expectations of ample supply have weighed on food prices.

FAO senior economist, Abdolreza Abbassian, said there were few indications of a price reversal in the months ahead.

He said signs of a slowdown in China were being reflected in imports of goods like soybeans, of which the world’s second-largest economy is the biggest importer globally.

“The indications are that in August they were still importing a lot, and they imported more than last August, but they imported much less than in July,” he said.