FAO Food Price Index

The FAO Food Price Index (FFPI) measures the monthly change in international prices of a basket of widely traded food commodities. It is a composite index that combines five commodity-group price indices, expressed relative to the 2014-16 base-period average of 100.

Composition and calculation

The FFPI is the weighted average of international price indices for five major food commodity groups. Their weights reflect each group’s average share in global agricultural exports during 2014-16.

• The five groups are cereals, vegetable oils, dairy products, meat and sugar.
• Each group index uses selected international price quotations considered representative of global markets.
• A rise in the overall index indicates that the weighted basket has become more expensive internationally compared with the reference period.

What the index reveals

The index provides a broad indicator of price movements in international food commodity markets. Its group-level indices help identify whether cereals, oils, dairy, meat or sugar are driving the overall movement.

• It helps monitor global food-price pressures and possible risks to food-import bills and food security.
• Comparisons over time show the direction and magnitude of international commodity-price changes, rather than the absolute cost of food.

Limits of interpretation

The FFPI does not directly measure retail food inflation faced by households in a particular country. Domestic prices also depend on exchange rates, taxes, subsidies, transport and processing costs, trade policies and local supply conditions.

• It is a global commodity-market indicator, not a measure of dietary affordability or the cost of a nutritionally adequate diet.
• International price changes may pass through to domestic consumer prices with different magnitudes and time lags.