The FAO Food Price Index (FFPI) averaged 127.1 points in May, 4.8% higher than in April and 39.7% higher than in May 2020.

Drawn up by the Food and Agriculture Organization of the United Nations, the FFPI is a measure of the monthly change in international prices of a basket of food commodities.

It consists of the average of five commodity group price indices weighted by the average export shares of each of the groups from 2014 to 2016.

In May, a “surge” in the international prices of vegetable oils, sugar and cereals drove the increase in the index, the FAO said. The index reached its highest value since September 2011 and was only 7.6% below its all-time peak in nominal terms, the organisation added.

The May spike came as “world cereal production is on course to reach a new record high”, the FAO noted.

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By GlobalData

Digging into the numbers, the FAO said its cereal price index increased 6% from April, led by international maize prices, which averaged 89.9% above their value a year earlier.

However, the FAO said maize prices “started to retreat at the end of May”, mostly on “improved production prospects” in the US.

The FAO added: “International wheat prices also showed a late-month decline but averaged 6.8% higher in May than in April, while international rice quotations held steady.”

Inflation has emerged as a challenge for global food manufacturers in recent months, with companies grappling with rising commodity, freight and packaging costs, as well as currency depreciation.

In recent weeks, when major listed food companies reported quarterly results, a number have flagged to investors the pressure from commodity food prices.

Unilever has said it was facing the worst inflation “in about a decade”, while Tyson Foods noted it was “substantial”. Nestlé has warned the predicament could spill over into next year, and Conagra Brands expects a “future acceleration” over the next few quarters.

Analysis from Just Food: Big Food faces fresh inflation battle