Investigating food prices in FAOSTAT

Hi. This is Dan Bebber. Today we’ll look at changes in food prices around the world and think about what might drive those changes. We won’t look at actual prices of specific foods but at a measure called a Food Price Index. This is an aggregate of the amount that the average person will spend on a basket of food relative to some historical standard. In the case of the FAO Food Index, the standard is the average price in 2010 for any country. Let’s go to the comparison page on the FAO statistical website, FAO Stat. Click on Compare Data in the bar at the top to begin.

First we’ll pick the most recent years, starting in 2000. Move the slider so the time range starts at 2000. Then in Groups, select Prices. In Domains, select Consumer Price Indices to get what the consumer pays. Select your country of choice. I’ll select the United Kingdom because that’s where I live. In Item, select Consumer Prices, Food Indices. The other variable is general indices, which would allow us to compare the price of food with the average cost of other items that households purchase. This might be interesting to look at later. Finally, select a month to look at. We’ll choose January for simplicity. Then click the blue Compare Data button.

We see that, relatively speaking, food prices increased steadily from 2000 to 2006, then more rapidly starting in 2007, and peaking in 2014. Since then, prices have declined somewhat but haven’t returned to pre-2007 prices. Let’s add in the general index so we can compare food prices to other things that people buy. We can see that up until 2009, food was relatively cheap in relation to 2010 prices but became more expensive for several years.

Now let’s compare the first six months of the year. Remove the general index and add in all the months to June.

This gives us a lot of coloured lines. But the important thing to look at is how much spread there is in values within a year. Large spread equals rapid change in food prices. 2008 sticks out, with large changes within the year, indicating rapid food price inflation. Finally, let’s compare the UK to another country, South Africa. Remember, we can’t compare the prices directly because for each country, the average for 2010 is set to 100. But we can look at relative changes.

The line for South Africa increases much more rapidly. And unlike the UK, food prices have grown faster and faster since 2012. What might be driving this change? Explore the data for some countries of your choice and try to find explanations for the changes and differences you see.