Rising food prices push up inflation significantly
Milan (AsiaNews) – 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.
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