The Market Monitor - Trends and impacts of staple food prices in vulnerable countries, Issue 22 - February 2014
The global cereal price index decreased by 23% on a year-on-year basis in the October-December 2013 quarter, driven by significant drops in nominal prices of maize (-37%), wheat (-13%) and rice (-22%).
Comparing quarterly averages, real prices2 of maize and rice fell by 17% and 10%, respectively, between Q3 and Q4 2013, while wheat prices remained stable.
Compared to the respective peak periods in 2008, maize, wheat and rice prices are significantly lower. The real rice price is less than half the 2008 level, while wheat and maize prices have dropped by nearly a third.
The significant price drops are driven by improved global stocks and mostly favourable production forecasts for cereals
In most domestic markets staple food prices mirror the global trend. The impact of domestic price changes on the cost of food baskets in the last quarter was low or moderate (<5%) in 64 out of 70 monitored countries. However, six countries experienced high (5-10%) price impacts; these are Egypt, Ethiopia, Guinea Bissau, Mali, Myanmar, and Sudan. The commodity which had the biggest influence on the cost change of the food basket was rice in Myanmar and in Guinea Bissau.
In South Sudan, the socio-political tension - on top of the macro-economic breakdown – has led to protracted insecurity and uncertainty. Food price imbalances illustrate the impediments to markets functioning given poor infrastructure. Further pressure on markets is likely, also due to increased households’ reliance on markets following the significant displacement. Gains in household food security prior to the conflict are thus likely to reverse in the coming months.
In Gaza, the closure of tunnels for imports from Egypt and the related shortage of imported goods, particularly fuels, triggered price increases. The withholding of public sector salaries, the bans on exports, and the reduction of economic activities have resulted in an increase of unemployment. According to estimates, 50,000 to 60,000 additional people may require food assistance due to complete tunnel closure.