International food prices have dropped 14 per cent over the past year, according to the World Bank.
Cheap oil and the prospects of a bumper crop for wheat, maize and rice in 2015 contributed to the price drop between August 2014 and May 2015.
“The agriculture and food sector continue to benefit from less expensive chemical fertiliser, fuel and transportation costs brought on by the previous year’s oil price declines, with food prices holding steady despite recent oil price hikes,” said the bank’s Food Price Watch.
Between August 2014 and May 2015 wheat prices fell 18 per cent, rice by 14 per cent and maize by 6 per cent. Over the same period sugar prices dropped 23 per cent, soybean oil by 9 per cent and fertilisers by 10 per cent. In August 2014 crude oil was just above $100 a barrel while in May 2015 it was around $62 a barrel.
However, the arrival of El Nino and the possibility of extreme weather, the appreciation of the US dollar and oil price rises “could drive up food prices in the coming months”.
Jose Cuesta, senior economist in the Poverty Global Practice at the World Bank, said: “The decline in food prices is welcome, because more poor people can potentially afford to buy food for their families. However, unexpected domestic food price fluctuations remain a possibility so it is crucial that countries are prepared to address dangerous food price hikes when and if they unfold.”