Guest Post: Rising Food Prices Push Up Inflation Significantly

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Submitted by Maurizio d'Orlando of AsiaNews

Rising Food Prices Push Up Inflation Significantly

A recently released
report by the World Bank’s Food Price Watch confirms that rising
agricultural products are sharply pushing up global food prices in
lower-income nations (see “World food price uncertainty presents social
risks,” in AsiaNews, 4 February 2011), especially among the poorest (where the poverty line is defined as US$ 1.25 per person per day).

The WB’s global food price (GFP) index increased by 15
per cent between October 2010 and January 2011, 29 per cent above its
level a year earlier. The global prices of wheat, maize, sugar and
edible oils especially saw sharp increases. According to the WB
estimates, an additional 44 million people fell into poverty
.

For some Asian nations, the price of wheat rose
considerably: Kyrgyzstan (54 per cent), Bangladesh (45 per cent),
Tajikistan (37 per cent), Mongolia (33 per cent), Sri Lanka (31 per
cent), Azerbaijan (24 per cent), Afghanistan (19 per cent), Sudan (16
per cent), and Pakistan (16 per cent).

 

Wheat                                     

Change in Price( per cent)

Calorie Share ( per cent)

World price (US$, HRW US Gulf Ports)

75

 

Kyrgyzstan (retail, Bishkek)

54

40

Bangladesh (retail, national average)

45

6

Tajikistan (retail, national average)

37

54

Mongolia (retail, Ulaanbaatar)

33

42

Sri Lanka (retail, Colombo)

31

14

Azerbaijan (retail, national average)

24

57

Afghanistan (retail, Kabul)

19

..

Sudan (wholesale, Khartoum)

16

15

Pakistan (retail, Lahore)

16

37

 

For other Asian nations, rising rice prices were more important.

 

Rice                                     

Change in Price( per cent)

Calorie Share ( per cent)

World price (US$, 5 per cent Thai, Bangkok)

17

 

Vietnam (retail, Dong Thap)

46

59

Burundi (retail, Bujumbura)

41

3

Bangladesh (retail, Dhaka)

19

70

Pakistan (retail, Lahore)

19

6

Indonesia (retail, National average)

19

50

 

The WB report does not provide data about Asian
nations that are above the poverty line. Its findings are based on
sources from the Global Information and Early Warning and Information
System (GIEWS) of the Food and Agricultural Organisation.

Rising agricultural prices (60 per cent on average)
are not due to scarcity (grain production dropped only 2 per cent after
three years of bumper crops). When the US Federal Reserve began its
second round of quantitative easing (QE2), non-agricultural resources
(cotton, tin, rubber, etc) jumped to historic heights. Other commodities
like oil also saw huge increases (Brent reached US$ 104).

Large-scale monetary expansion is due to a major
financial move by the Bush (with bipartisan congressional support) and
the Obama administrations as part of the US government’s ‘economic
stimulus’ plan. The Federal Reserve’s quantitative easing plan also
played an important role.

Such moves were undertaken to save US financial and
banking institutions from failure following the sub-prime bubble. The
derivative bubble (which represents 15 times the world GDP) has not yet
burst.

According to the WB, rising food prices have created a
range of “macro vulnerabilities”, technical jargon to say that higher
food prices are the cause of social unrest and popular uprisings.