World food prices rose in July to their highest level in more than three years, mainly due to adverse weather conditions and the escalation of conflicts in the Persian Gulf and Black Sea regions, the Food and Agriculture Organization of the United Nations (FAO) said.
The FAO food price index, which tracks monthly changes in a basket of internationally traded food commodities, averaged 131.1 points in July, compared with 130.3 points in June. This is its highest value since January 2023.
The main contributor to the increase was the rise in cereal prices. The FAO Cereals Index rose 3.4% month-on-month, with wheat prices up 5.8%.
According to the organization, adverse weather in key agricultural areas, as well as heightened tensions in the Persian Gulf and Black Sea regions, have supported the rise in prices of agricultural commodities on international markets.
Prices are also being pressured by the serious disruption of grain exports via the Black Sea. As a result of the military actions and increased risks to shipping, commercial shipments from Ukrainian ports are in practice severely restricted, while Russian deliveries are also hampered by concerns of shipowners and insurers, increased transport costs and the risk of attacks. Thus, international markets are losing a significant part of the supply of wheat and other cereals from two of the world's largest exporters.
The blockade of the Strait of Hormuz is also having an additional impact on agricultural production. The region is a key route for the export of natural gas and petrochemical raw materials needed for the production of nitrogen fertilizers. The difficult deliveries and the increase in the price of energy carriers have led to an increase in fertilizer prices, which increases farmers' production costs and creates the prerequisites for a new increase in food prices in the coming months.