Eurozone inflation hit a 3-year high of 3.8% in September, driven by energy prices

In September, the global cost of food surged to levels not seen in nearly four years, according to the United Nations' Food and Agriculture Organization. The FAO Food Price Index reached 136.0 points, up from 134.0 in August and the highest since November 2022. This increase is attributed to logistical challenges and weather-related concerns impacting crop markets.

The rise in sugar prices, driven by fears of a severe El Nino weather pattern, reached an 18-month high. Meanwhile, a decline in Black Sea trade due to war-related disruptions pushed wheat futures to a three-year peak. The FAO Food Price Index, which tracks the monthly changes in international prices for a selection of food commodities, averaged 136.0 points, marking a 2-point increase from August.

FAO chief economist Maximo Torero stated that global commodity prices are persistently climbing due to disruptions in the Strait of Hormuz, the Black Sea, and climate shocks. These pressures, if sustained, could soon affect consumer food prices, particularly in nations reliant on food and energy imports. The FAO's sugar price index jumped by 6.1% from August, with adverse weather threatening to reduce supply in major production areas.

The cereal price benchmark rose by 5.1% in September, driven by reduced yield prospects for US corn and disruptions to Black Sea grain trade.

The vegetable oil prices increased by 0.9%, primarily due to palm oil, driven by strong demand and concerns over El Nino-related production risks in Southeast Asia. The FAO's meat index, however, eased by 1.1%, mainly due to lower poultry prices linked to a drop in EU demand following the implementation of new import rules.

In a separate report, the FAO maintained its forecast for global cereal production in 2026 at 2.979 billion metric tonnes, which is 2.1% lower than the previous year's peak but still the second-largest harvest on record. However, the organization revised its forecast for world cereal trade in 2026/27 down by 0.7% from the previous month, citing lower wheat and maize export expectations due to constrained Black Sea shipping.