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.