UN Food Price Index understates soaring real cost of food, argues researcher

By focusing on nominal prices instead of inflation-adjusted real prices, the UN Food and Agricultural Organization (FAO) risks understating global food security problems. The inflation-adjusted index would highlight the current steep increase in the cost of food, partly attributable to weather shocks, and more recently coinciding with supply-chain problems and other issues during the COVID-19 pandemic Dr Alastair Smith of the Department of Global Sustainable Development at the University of Warwick calls on the UN Food and Agricultural Organization (FAO) to focus on real, not nominal food prices, in a correspondence piece published today in Nature. Dr Smith argues that focusing on real, rather than nominal, food prices in the monthly FAO Food Price Index would be a more accurate indicator of food accessibility and would lead to better policies aimed at tackling world hunger and declining nutritional standards. His research into changing food prices has found that, using inflation-adjusted values, the real average price of food is currently the highest it has been since records began, apart from during the oil crisis of the 1970s. Dr Smith said: -The FAO Food Price Index is currently constructed using nominal price changes and trends. Using such data, the FAO concludes that while food prices grew 20% in 2021, they remain below their peak in 2012. -By contrast, using inflation-adjusted prices we see a more alarming picture, in which the price of food showed a steady decline from the 1960s to the year 2000, then a rapid rise since the turn of the millennium.