Food will be cheaper this year than last year. Their price will drop thanks to a rich grain harvest, bad weather can be a complication

According to Oxford Economics, consumers should finally pay less for food this year. And on a global scale. “Our baseline forecast suggests that global food commodity prices should see a year-over-year decline this year, reducing pressure on retail food prices,” CNBC reports, citing the company.

The driving force behind price reductions should primarily be the abundant supply of certain cereals. According to experts, this year we are probably in for a record corn harvest and a very rich wheat harvest. However, it will be slightly lower than in 2022 and 2023. That there is enough of both commodities is also proven by the prices on the stock exchange, which in the case of grain fell by 10 percent year-on-year. In the case of corn, the decrease was six percent.

Farmers globally increased grain production as early as 2022, when Russia invaded Ukraine. Both countries, which belong to the largest grain exporters, still maintain strong exports despite the conflict. Ukraine is doing well despite the fact that Russian leader Vladimir Putin abandoned the Black Sea Grain Initiative last summer and Russia subsequently attacked two Black Sea ports, greatly crippling exports from Odessa and nearby Chornomorsk.

Half of the world’s caloric intake

Why are cereals driving food prices? Together with rice, corn and wheat make up more than half of the world’s caloric intake. In other words, this means that a drop in global prices will significantly affect the budgets of consumers around the world.

But while both grains tend to fall in price, rice prices continue to rise due to global shortages. Moreover, the situation is not helped by the restrictions on exports by India, one of the largest importers of rice, which normally accounts for more than 40 percent of the global trade. Last summer, the country tried to prevent prices on the domestic market from rising due to a poor harvest destroyed by heavy rains. And so, unlike corn and wheat, prices on the stock exchange rose by more than eight percent year-on-year.

As for overall food prices, according to the World Bank, they already fell last year, namely at a rate of nine percent. “In 2024 and 2025, world food prices are expected to decline further by two and three percent, respectively, as the global supply outlook continues to improve,” the institution wrote on its blog in late January.

Beware of bad weather

Similar news was also reported by the World Price Index of the United Nations Food Agency. It hit a three-year low in February. In March, however, it showed a slight recovery, mainly due to rising prices of dairy products, meat and vegetable oils. “We expect prices to fall by a further 5.6 percent this year and increase annually next year,” predicted Oxford Economics chief economist Kiran Ahmed.

But the forecast could still be affected by bad weather and crop diseases. After all, both of these disrupted the process of growing cocoa, which recently soared to a record level. It is currently traded on the stock exchange for more than 10,000 dollars (roughly 233,000 crowns) per ton. “Food prices are near the bottom now and through the second half of 2024 they will gradually start to grow,” the report mentions.

The reawakening of buyers from Africa and Asia, who are waiting for lower prices to purchase wheat, could also contribute to the increase in prices. Expensive rice could then result in further restrictions on exports from India. “Although we expect food prices to remain muted this year, there is an increasing risk that they could bounce back from the bottom more significantly than expected,” adds Ahmed, adding that something like this can maintain higher inflation and pressure on consumers.