FAO Food Price Index has seen a rebound in the month of August. June and July witnessed a decline but August has come back in a big way. The August index stands at around 127.4 on a month-on-month (MoM) basis, this is more than 3 percent of gain, but on a year-on-year (YoY) basis, we are still 33 percent on the higher side when it comes to food prices.

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Within the index also, there are some components which have actually seen a huge price rise.

Sugar, for example, has seen the maximum increase of 9.6 percent on a month-on-month basis. There are Brazil crop concerns on account of drought and now frost, and then the global markets are looking at around 3 million tonnes of deficit in this year, and that clearly has been supportive for sugar.

The other component is the Vegetable Oil Price Index, which also has gained 6.7 percent on a month-on-month basis. Remember, the international palm oil prices were hitting an all-time high in the month of August. The other components in Vegetable Oil Price Index like sunflower, rapeseed prices have been surging as well.

The Cereal Price Index also gained by 3.4 percent on a month-on-month basis. Within this index, it is the world wheat prices which gained by 8.8 percent. The world wheat inventories are at the lowest in eight years in the US and at 40-year lows in Canada, and that is the reason why there has been a surge in wheat prices and the Cereal Price Index has been rising because of that as well.

Components like dairy and meat witnessed a marginal decline.

The FAO also has come out with the global production levels of many of these food grains for 2021. So when it comes to cereal, there is nearly a 0.7 percent increase. Wheat saw an increase of 0.7 percent as well.

The coarse grains are looking at a higher production this time around at 1.3 percent of an increase and rice is the second largest on record, with regard to the global inventories.

For rice, we are looking at nearly a percentage point of increase in production. The consumption, clearly, has been much higher because of the kind of global restrictions that are there. Rice has been a major commodity that the world has been holding.

(Edited by : Dipika)