World food prices hit three-year high in July as weather, war and El Niño drive up crop costs

FAO index reaches 131.1 points

The FAO Food Price Index, which tracks monthly changes in a basket of internationally traded food commodities, averaged 131.1 points in July 2026, up from 130.3 in June and the highest reading since January 2023. The index rose 0.6% month-on-month and 1% compared with the same month a year earlier. The FAO attributed the increase to adverse weather, the wars in Ukraine and the Middle East, and the El Niño weather phenomenon, all of which depressed harvests and pushed costs higher.

Cereals lead the rise

The cereal price index climbed 3.4% in July compared with June, the single largest driver of the overall index. Within that category, wheat prices jumped 5.8% on the month and 9.9% on the year, reaching a two-year high. The FAO linked the surge to "heightened concerns over continued disruptions to Black Sea export flows and damage to export infrastructure," following intensified attacks between Russia and Ukraine. Europe is also headed for one of its steepest grain harvest declines on record; the heatwave that swept across the continent in June is estimated to have forced grain farmers to destroy 9 million tonnes of crops including wheat, barley, maize and oats. Maize prices rose 3.6%, supported by hot and dry weather in parts of the US Corn Belt and spillover effects from firmer energy markets. Rice prices remained broadly stable.

Sugar and vegetable oils

Sugar prices jumped 5.6% in July, driven by fears over persistent hot and dry weather affecting EU crop yields and damage from the rapidly developing El Niño system on Asian production. New rules in Brazil increasing the amount of ethanol that can be added to gasoline also increased demand from fermenters. The sugar index, however, remained 8% below its year-ago level. The vegetable oil index rose 2% to its highest level since June 2022. Palm oil prices were "principally supported by firm demand from the biodiesel sector in Indonesia and higher crude oil prices." Soy oil prices also increased, while sunflower and rapeseed oil prices fell.

Meat and dairy ease

The meat price index fell 2.8% in July, its first monthly decline of the year. Poultry, pork and beef prices all dropped, with poultry falling "largely due to lower quotations in Brazil in a context of abundant export supply." High summer temperatures limited pigs' growth rates, providing some price support. Sheep meat was the exception, rising to a new record. The dairy index slipped 0.7%, as lower prices for butter and milk powders offset higher cheese prices.

Broader consequences

The Iran war has also been pushing up food prices in recent months, as about a third of fertiliser production travels through the Strait of Hormuz. Increased food commodity prices tend to translate into higher shelf prices in subsequent months as suppliers pass on costs. Retail specialist Worldpanel put annual grocery price inflation in Ireland at 4.7% in June, down from above 5% previously. The UN's World Food Programme warned that 50 million people are likely to be pushed into acute hunger.