Food prices fall globally but rise in Tunisia

World food prices fell in April, after a significant jump the previous month, mainly on the back of a modest decline in vegetable oil and grain prices, the report said in a communicatedtoday Friday, May 6, 2022 the Food and Agriculture Organization of the United Nations (FAO).

The FAO Food Price Index recorded an average value of 158.5 points in April 2022, down 0.8 percent from the record high reached in March. The Index, which tracks the monthly movement of international prices of a basket of commonly traded food products, was still up 29.8 percent from its April 2021 level.

The FAO Cereal Price Index fell 0.7 points in April, dragged down by a 3.0 percent drop in world maize prices, the FAO said. International wheat prices, strongly affected by the prolonged blockade of ports in Ukraine and fears over growing conditions in the United States of America, rose 0.2 percent, tempered by the increased shipments from India and higher than expected export volumes to the Russian Federation.

FAO has also released its new Cereals Supply and Demand Bulletin, which contains updated forecasts indicating a likely 1.2 percent decline in world cereal trade in the 2021-2022 marketing year (July-June). ) compared to the previous year.

This decrease concerns maize and other coarse grains, but trade in rice is expected to increase by 3.8 percent and that of wheat by 1.0 percent, as exports from the Russian Federation to Egypt, the Republic Islam from Iran and Turkey should be more abundant than expected.

According to monthly newsletter of the National Institute of Statics (INS) on the evolution of the consumer price index for the month of April, in monthly variation, the prices of food products increased by 1.6%, mainly due to an increase in fresh vegetable prices (4.3%), sheepmeat prices (4.7%), beef prices (2.3%), fresh fish prices (3. 4%), the prices of fresh fruit (2.6%), the prices of cereal by-products (1.9%) and the prices of edible oils (1.5%).

Nevertheless, in April 2022, food prices increased by 8.7% over one year, according to the INS. This increase is mainly due to the increase in the price of eggs by 20.4%, edible oils by 20.4%, fresh fruit by 19.5%, fresh vegetables by 12%, poultry by 9%, fresh fish by 9%, cereal derivatives by 9.1% and sheep meat by 6.6%.

The World Bank (WB) estimated, in its Middle East and North Africa (MENA) economic newsletter, published on April 14, 2022, that inflation in Tunisia should reach an average of 6.5 % in 2022 and 6.5% in 2023.

The WB also points out that Tunisia is also facing difficulties in maintaining its food subsidies. Rising oil prices could, however, delay reforms, as subsidies could rise with global food and energy prices.

According to a recent report by the New York-based international financial institution, “Morgan Stanley” (MS), inflation constitutes a social risk for Tunisia.

The 2010 uprising that ultimately led to the ousting of former President Ben Ali occurred against the backdrop of high global food prices, which impacted local prices, MS recalled.

Although inflation was not the only reason for the uprising, it was a decisive factor as the government was forced to increase subsidies to try to cushion the impact. This situation was unsustainable and contributed in part to the sharp deterioration in public finances.

The institution indicated in its report on the country’s sovereign credit profile that the potential monetization of debt (recourse to domestic financing) adds additional risk to the inflation outlook. As the country’s sources of financing are limited due to the absence of an IMF program, it is likely that debt monetization will again be a source of financing this year as it was in 2021.

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