Tariff Uncertainty Drives Global Food Prices to Two-Year High

(Bloomberg) — Global food prices rose to a two-year high in April, a sign that tariff uncertainty is starting to put a squeeze on trade.

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A United Nations index tracking raw commodity costs of food rose to 128.3, a 1% month-on-month jump, taking it levels last seen in March 2023. While it takes time for the impact to filter through to supermarkets and the gauge remains well below a 2022 peak, the move hints at the possibility of pricer groceries after a period when food inflation had eased.

“Currency fluctuations influenced price movements in world markets, while tariff policy adjustments raised market uncertainty,” according to the UN’s Food and Agriculture Organization.

Countries may have driven up short term demand for some products, said Monika Tothova, an economist at the FAO, by trying to stock up to reduce the impact of tit-for-tat levies set in motion by President Donald Trump’s widespread tariffs

Other supply concerns also pushed up the price of grains, meat and dairy. Tighter wheat supplies from Russia, the world’s top exporter, saw the grain edging up slightly, the FAO said. The rise in dairy, 2.4% on the previous month, was led by international butter prices, which hit a new all-time high due to declining European inventories.

While food supplies and prices are often determined by weather, additional volatility, stemming from moves such as US tariffs and the subsequent retaliation from trade partners, had been flagged earlier this year. Despite a 90-day pause on some levies, global food markets have been roiled by the policy back and forth of recent weeks.

“We are always concerned about the dry conditions here and there,” said Tothova, but what is going to happen with trade policy “and how countries will retaliate, that still remains a big story.”

(Updates with details and analysts comments.)

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