Global food prices near the record-high

Global food prices jumped 4.8% m/m in May, which is the
highest monthly growth since 2010, pravda.com.ua reported on June 4 citing Food
and Agriculture Organization of the United Nations (FAO). The relative FAO Food
Price index in May reached 121.7 points, increasing 39.7% yoy. The index is
7.6% lower than its record-high in February 2011.

The prices in May were mostly driven by grain (6.0%
m/m), vegetable oil (7.8% yoy) and sugar (6.8% yoy). In addition, milk prices
inched up 1.5% m/m, while meat prices grew 2.2% m/m.

Evgeniya Akhtyrko: The recent
growth of global food prices is mostly attributed to the increasing demand
driven by a massive throwing of public money for pandemic fighting around the
world. The recent acceleration of consumer inflation in Ukraine was mostly the
result of food prices growth, and the global growth of food prices was
definitely a factor. In April, prices of eggs surged 90.0% yoy, prices for
vegetable oil increased 62.9% yoy, sugar prices advanced 65.0% yoy.

The recent leap of prices for food staples was
tangible for an absolute majority of Ukrainian consumers, including the better
off. The further consumer inflation trend in Ukraine amid continued growth of
global food prices will largely depend on the ability of Ukrainian consumers to
accommodate the new price levels. If the food producers don’t see any slowdown
in food consumption, they are likely to drive their prices up to keep up with
world trends. As a result, our expectations for consumer inflation to cool off
by the end of this year will not meet. Recall, the consumer inflation in April
was 8.4% yoy, while we expect it to go down to 8.0% YTD in 2021.