When food prices return to pre-pandemic levels

World food prices are expected to fall for the second month in a row against the background of the arrival of a new crop. But now the cost of the main agricultural products is a third higher than in July 2020, according to the data of the Food and Agriculture Organization of the United Nations (FAO).

In July, grain prices fell by 3% mom. But this is 29.6% higher than a year earlier. Prices for corn in anticipation of a good harvest sank 6%. Due to low demand, the cost of barley decreased by 6.4%. But wheat rose in price by 1.8% to the highest level since 2014. A prolonged drought has led to a decline in wheat crops in Canada and the United States . In Europe, the harvest was under threat, on the contrary, due to heavy rains. And in Russia, the first harvested crops are still slightly lower than expected, the FAO explains.

Prices for dairy products in July decreased by 2.8%. But it is still higher than in July 2020 by 14.5%. Prices for vegetable oils for the month decreased by 1.4%, but so far they are also higher than long-term values.

Sugar and meat rose in price on the world market. After four months of growth, sugar prices reached their highest level since March 2017. The main reason is drought and then frost in Brazil, the largest exporter of sugar. Of meat, poultry has grown in price the most - demand from East Asian countries has increased.

In Russia, the correlation with world prices is felt in the food that we export in large volumes. Maxim Reshetnikov, head of the Ministry of Economic Development, spoke about the noticeable impact of world food prices on the acceleration of inflation in Russia.

"In July, world food prices fell by 1.2%. But now they are higher by 31% than a year ago."

Prices for wheat, exported by Russiais the world leader, now the domestic market has also grown, says Alexander Korbut, Vice President of the Russian Grain Union. In part, this may be the result of speculation, the expert admits. But still, such a picture is a consequence of objective reasons. In early August, Rosstat clarified data on sown areas under the main crops. Due to the death of winter crops, the area under wheat turned out to be 1.3 million hectares less than last year. And in the fields, the situation is not favorable everywhere now, the expert says.

At the same time, Korbut is sure that the prices for basic food will still return to pre-pandemic levels. In 2020, prices have spurred infusions of money from major countries amid the pandemic. But high prices are always an incentive to increase production. And more grown - less price. In 2010, food prices were also at multi-year highs (there was a drought in Russia). But then, little by little, production grew, and prices fell. "Now there is a new cycle. A return to the previous prices is inevitable. Another thing is that for a short time - climate change will continue to overlap," the expert says.

And, for example, for meat, Russia does not have a serious dependence on world prices - so far we are not a very noticeable player in the world market. In addition, for different types of meat, the situation can radically differ in different countries, depending on many factors, says Sergey Yushin, head of the executive committee of the National Meat Association. For Russia, a slight increase in meat prices is a consequence of the unfavorable situation with animal diseases at the end of the past and the beginning of this year (avian influenza and African swine fever). In addition, there is still a high demand for meat: against the background of many other products, it does not rise in price so much. Yes, and the warm summer drives the Russians out onto the streets, and, therefore, kebabs are fried more often than usual.


Meanwhile

Last week, Rosstat recorded deflation at 0.06%. In annual terms, inflation in Russia slowed to 6.45% from 6.49% a week earlier, according to a review of the Ministry of Economic Development. The main constraining effect continues to have an accelerated decline in prices for fruits and vegetables and continued deflation in the service sector, the ministry said.

Thus, the dynamics of growth in food prices, except for fruits and vegetables, slowed down to 0.1% in the reporting week (0.2% a week earlier). Prices for fruits and vegetables decreased by an average of 3.1% over the week. Carrots fell in price immediately by 11.3%. Prices for potatoes fell by 6.4%. According to the Deputy Head of the Ministry of Industry and Trade Viktor Yevtukhov, prices for vegetables of the "borscht set" are decreasing both among producers and retail chains. At the same time, the most significant price reductions were recorded at farmers' markets and weekend markets, he says.
And this fact will be taken into account when preparing the monthly analytical report Meatinfo.ru