Global food prices continued to decrease in July for the second consecutive month thanks to fall in prices of cereals, vegetable oils and dairy products, the UN Food and Agriculture Organization (FAO) said on Thursday.

The FAO food price index dropped 1.2% in July month-on-month to average at 123 points, but 31% above its level last year, the UN body said in a statement.

FAO's food price index measures monthly changes in the international prices of five major food commodity groups – cereal, meat, dairy products, vegetable oils, and sugar.

The cereal price index slipped 3% from June, pushed down a drop in international maize prices.

The FAO dairy price index fell 2.8%, declining for the second consecutive month, following a 12-month of increase.

"In July, international quotations for all dairy products represented in the index fell, with skim milk powder registering the biggest drop, followed by butter, whole milk powder and cheese, principally reflecting reduced import demand for spot supplies," it said.

The vegetable oil price index reached a five-month low, slipping 1.4% from a month ago, as lower prices for soy, rape and sunflower seed oils more than offset rising palm oil values.

On the contrary, the FAO sugar price index posted its fourth monthly rise with 1.7% in July, driven by firmer crude oil prices as well as uncertainties over the impact of recent frosts on yields.

This July, the meat price index was up marginally from June, the FAO said./agencies