The rising cost of world food prices is set to cause greater concern for worldwide inflation this year. The United Nations released its latest figures of the Food and Agriculture Organisation Food Price Index, which showed its highest rating since records began 20 years ago. This has increased for the seventh month in a row, and worryingly looks set to continue.
The last time prices rose to a similar level in 2008, food riot protests were held in many countries around the world, including Cameroon. The political unrest in Egypt, Algeria and Tunisia, whilst being focused on stronger political reasons, has also included protests against high food prices. The conflict in Egypt has additionally resulted in brent crude oil prices hitting $100 per barrel for the first time since 2008. This increase will affect all areas of the worldwide economy, from product transport costs to petrol prices at the pumps. Additionally, it will spark interest in developing biofuels, which has already had an effect on food supplies in Africa and South America.
One reason for recent escalation in prices is the serious flooding in Western Australia. The region was a large producer of wheat, and this has caused the Cereal Price index to hit 245 points. Bad weather in Africa has also effected food supplies, forcing prices upwards.
A significant impact on these worldwide increases has been the sustained increase in demand for food from the populations of large developing countries, such as China and India. Many charities, including Oxfam, have expressed their fears of many of the world’s impoverished fatally suffering as a consequence of these huge prices. As many in developing countries already spend such a large proportion of their income on food, any further increases may lead to a humanitarian crisis.
It has been reported that weekly food bills in Britain have risen by 6.1 per cent in the last 12 months, adding an average of £317 extra per year. British shoppers have already had to deal with a VAT rise of 2.5 per cent and are bracing themselves for an additional fuel duty rise.
At the recent DAVOS conference in Switzerland, inflation was one of the main topics of discussion. This was a contrast to last year when all the talk was of worldwide deflation. Continued rising inflation would have a serious effect on developed countries emerging out of recession, failing to eliminate the fears of a double dip recession.