Global food commodity costs experienced a minor dip of 0.2% in May, as reported by the United Nations’ Food and Agriculture Organization (FAO). This decrease was primarily driven by a significant decline in the prices of vegetable oils and dairy products. However, this was largely counterbalanced by increases in the price of grains and sugar. Despite the recent slight fall, overall global food prices continue to hover near their highest levels in over three years.
The FAO Food Price Index (FFPI) averaged 130.8 points in May 2026, a 0.2% decrease from April. It remains 2.9% higher than a year ago but is 18.4% below its peak in March 2022. The FAO Vegetable Oil Price Index decreased by 4.6% in May, marking the first monthly decline since the beginning of 2026, primarily due to lower palm and soy oil prices. Conversely, the FAO Cereal Price Index rose 2.6% in May, with wheat prices increasing for the fourth consecutive month due to smaller expected harvests and higher fuel and fertilizer costs. The FAO Sugar Price Index also increased by 7.5% in May, reaching its highest level since October 2025, driven by concerns over tightening global supplies and a greater diversion of sugarcane to ethanol production in Brazil.
The broader economic context includes the lingering effects of the Iran war, which continues to ripple through food supply chains. While fertilizer prices have largely retreated to pre-conflict levels after a peak in mid-April (granular urea dropped by around 45%), uncertainties related to next year's harvest persist due to higher energy costs and disruptions to global commodity markets. Dry-bulk freight rates have also soared 22% since the war began, peaking in late May and remaining well above pre-conflict levels. The US and Israeli attack on Iran in late February and the subsequent closure of the Strait of Hormuz caused significant shocks, pushing up prices for fuel, energy, fertilizers, and other agricultural products. Even with an interim deal to reopen the strait, supply chains are expected to take at least another six months to normalize, and energy infrastructure may take even longer to repair, according to Liliana Danila, chief economist at the FDF.
UK food prices have risen 40% since 2019, with sugar, eggs, and chocolate seeing increases of at least 60%. Eighty-two percent of UK food and drink businesses anticipate raising prices due to the Iran war, and many expect to reduce headcount or pause investments. The cumulative effect of multiple years of upward inflationary pressure is significant, as food prices rarely drop back to pre-crisis levels. For instance, the cost of a shipping container for flour increased from $2,000 in 2025 to over $5,000. Farmers and manufacturers are facing increased operational costs, with one French farmer, Delorme, experiencing a €25,000 increase in annual fuel expenses and expecting to lose around €80,000 ($92,870) in revenue due to reduced crop yields.
