Food Commodity Prices Hit Two

With the leading supermarkets starting to lower the price of some everyday basics to reflect falling commodity costs, global data released today suggests this trend could continue in the months ahead.

The UN's Food and Agriculture Organization's (FAO) price index, which tracks the most globally-traded food commodities, fell again last month to its lowest level in two years, as sharp falls in the cost of vegetable oils, cereals, and dairy outweighed increases for sugar and meat.

The Index for May averaged 124.3 points against a revised 127.7 for the previous month. The latest reading marked the lowest since April 2021 and meant the overall index was now 22.1% below an all-time peak reached in March 2022 following Russia's invasion of Ukraine.

Last month, Tesco joined Morrisons in suggesting food inflation is set to abate and even reverse in the coming months. After announcing a fourth wave of price cuts since the start of the year, Morrisons’ Chief Executive David Potts promised that shoppers would see many "deflation dividends" over the coming months.

Tesco subsequently revealed its latest round of price cuts, with reductions on 30 products, including own-label pasta and sunflower oil. And earlier this week, Sainsbury's announced another round of price cuts, this time on over 40 own-label dairy lines to reflect the falling cost of milk.

This follows a number of supermarkets dropping the price of some lines of bread and butter in recent weeks in response to falling commodity prices.