Global Food-Price Index Hits Record

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A prominent indicator of international food prices hit a record high in December, sounding a warning about looming threats to the world’s poor and to global growth.

The United Nations Food and Agriculture Organization’s monthly food price index rose for the sixth consecutive month to 214.7, topping the previous peak, 213.5, reached in June 2008.

The index doesn’t measure domestic retail prices, which can be affected by a wide range of factors, including government subsidies. Instead, the index tracks export prices and can still serve as a barometer of what consumers may pay.

„The longer [food prices] remain high, the longer there is a possibility of a repeat,” said Abdolreza Abbassian, secretary of the FAO’s intergovernmental group on grains.

Despite challenging growing conditions in some major exporting nations, strong recent crops in many developing countries are helping governments and consumers manage the price spike, Mr. Abbassian said. Some African nations, he said, have seen healthy recent corn harvests.

The trade-weighted FAO index monitors the monthly change in a basket of 55 commodities, including meat, dairy, cereals, oils and sugar. Some of those categories are actually lower than they were in June 2008. But others are substantially higher.

The overall FAO index rose 4.3% in December, largely driven by significant monthly price increases in cereals and sugar. The indexes for those food groups rose 6.4%, and 6.7%, respectively, in December from November.

Poor weather conditions in major exporting countries across the globe have significantly curtailed harvests and expectations, sending prices sharply higher.

Corn and wheat futures are each up 49% since the end of 2009; soybeans are up 33%. But, Mr. Abbassian said, prices for important staple foods are still below their record highs. Rice is priced at half its high two years ago, he said.

China has raised interest rates twice in recent months to combat inflation. Euro-zone inflation jumped past the bloc’s target rate for the first time in more than two years, data released this week showed, and economists said the rise was likely due to higher food and energy prices.

Mr. Abbassian said poorer countries will at some point have to tap the international markets for foodstuffs. „That is the worrisome development,” he said. „We consider the [current] prices quite punitive for the poorer countries.”

Mr. Abbassian said prices will more likely rise this year than fall due to poor weather. Any potential price correction, therefore, isn’t likely to happen before the middle of the summer when the next harvests are due to begin. Read more at professional.wsj.com

 

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Shelter chief says poor will be priced out of many areas of London

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Large swaths of London will become „largely unaffordable” to housing benefit recipients from next year, says an authoritative new study from Cambridge University.

But the Cambridge study, commissioned by the housing charity Shelter, found that rents on most two-bedroom properties in London would be more expensive than the new caps. It also claimed that people would be forced to move out of their homes, not only in parts of central London but in many of the capital’s suburbs.

The analysis follows revelations in last week’s Observer that inner London councils were block-booking bed and breakfasts outside the capital to house the tens of thousands of poor families that would be forced to move.

Liam Smith, the council leader in Barking and Dagenham, said: „We will need money that we currently don’t have to deal with that situation. We simply haven’t budgeted for this additional pressure on our finances.”

Karen Buck, the local Labour MP, described the move as „truly shocking”. She added: „Westminster council’s pitch to the government is that housing benefit cuts can only work by removing homelessness protection built up over decades.”

While the problems are most acute in London, figures published on the blog Left Foot Forward reveal how the cap, as well as a series of other housing benefit reforms, will also hit families across the country.

Many outside the capital will be hit by the decision to reduce the rate at which the local housing allowance is set from the median of local rents to the 30th percentile. Read more at professional.wsj.com

 

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