Energy Spike Drives Global Food Price Hikes

Global food prices moved higher in March, with energy costs cited as the main driver, according to the United Nations Food and Agriculture Organization (FAO) on Friday. The agency said the increase was linked to elevated oil prices associated with the ongoing conflict in the Middle East.

The FAO Food Price Index, which measures a basket of widely traded food commodities, averaged 128.5 points in March. That level represented a 2.4% increase from the index’s revised February reading, the FAO reported.

Officials at the FAO said that, since the conflict began, the overall rise in food prices has been modest. They attributed the movement largely to higher oil prices, which can raise costs across the food system, including transport and other energy-intensive steps in production and distribution.

The FAO also pointed to ample global cereal supplies as a stabilizing factor that has helped limit broader price pressure. In the agency’s assessment, those supplies have cushioned the overall impact on food prices even as energy costs have increased.

Looking ahead, the FAO warned that a longer-lasting conflict could create additional risks for agricultural output if it keeps input costs elevated. The agency said that if the conflict continues beyond 40 days and input prices remain high, agricultural production could be affected.

FAO Chief Economist Maximo Torero said farmers could respond to persistently higher costs by reducing inputs, planting fewer crops, or shifting to alternative crops. The FAO said such adjustments could weigh on future yields, with potential consequences for food availability and pricing for the remainder of the current year and into the next.