Have production costs reached their ceiling?

In April, the FAO food price index fell for the first time in a long time. Have the rising costs of production thus reached their ceiling or are we on a plateau until the next rise knocks?

Food commodities 30% more expensive

Food prices fell by -0.8% in April. However, food commodities are still 30% higher than in April last year. Nevertheless, the question arises whether the price increase has reached a ceiling? We will have to wait for the next FAO index for a definite answer, because after the record level of March, a decline was somewhat to be expected.

Energy prices slightly down in April

Prices for a barrel of crude oil and gas also decreased in April after they peaked following the Russian invasion of Ukraine. However, the slight decrease is not nearly enough to compensate for the huge increase in recent months. For energy prices, too, it will be a matter of waiting to see whether they stabilise, fall or move up again in the coming months.

Packaging, wages and transport

In addition to expensive food raw materials, food companies will also have to reckon with high prices in other areas in the coming months. For example, cardboard and plastic packaging is 30% more expensive today than it was a year ago. The price of metal packaging is 15% higher. Moreover, container freight rates have increased by 76% in one year and, after the wage indexation of 3.22% in January 2022, an indexation of 7.14% is expected for January 2023.

Source: Fevia