Global Food Prices Fall Most in 2 Years on Dairy Plunge
By Rudy Ruitenberg - Jun 7, 2012 7:31 AM ET .
Global food prices had their biggest drop in more than two years in May as the cost of dairy products slumped on increased supply, easing strain on household budgets.
An index of 55 food items tracked by the United Nations’ Food & Agriculture Organization fell 4.2 percent to 203.9 points from 213 points in April, the Rome-based agency reported on its website. That was the biggest percentage drop since March 2010.
A stronger U.S. dollar may weaken the effect of falling prices on importers’ food bills, Abdolreza Abbassian, an FAO economist, said by phone from Rome. The U.S. Dollar Index, which tracks the exchange rate against major world currencies, jumped 5.4 percent in May, the biggest monthly gain since September.
“The dollar has strengthened tremendously, so if you’re an importing country and you have to pay in dollars, you’re not really getting the full impact of these sliding prices,” Abbassian said. “You’re not getting the full effect.”
Meat prices may fall in coming months, mirroring a price correction for dairy, according to Abbassian. The FAO Dairy Price Index slumped 12 percent to 164.1 points, the biggest drop since January 2009, while the meat index slipped 0.5 percent to 178.8 points.
“The dairy decline is from a very high level,” Abbassian said. “It’s a delayed correction. It would not surprise me to see the same for meat.”
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