Tuesday March 25, 2008

Higher food prices to continue: World Bank

businesstimes.com.sg :

A global surge in food and fuel prices has become a serious problem for developing countries and the problems are likely to persist for years, a senior World Bank official said on Thursday [20 Mar 2008]. "It has reached a critical stage where you do have food riots in a dozen countries or some related disturbance," Danny Leipziger, the World Bank's vice president for poverty reduction and economic management, said. While some benefit from higher revenue on export of commodities, the problem of surging food and fuel prices is widespread enough to have affected about 30 to 40 developing countries adversely, he said.

Global prices for food and fuel have risen sharply and even accelerated in 2008, while food inflation between January 2007 and 2008 has seen increases ranging from 10 to 34 per cent. Behind the surge are high energy and fertiliser prices, increased use of food and crops for bio-fuels, higher per capita income in developing economies like China and India, and record low world stocks of grain.

"In the initial stages of a problem like this, in the first three to four months, countries can rely on fiscal means and their reserves. As it persists, I think they have to look for longer-term solutions," Mr Leipziger added. The International Monetary Fund (IMF) has recommended targeted measures to protect the poorest from higher prices through feeding programs and cash transfers, and urged governments to avoid un-targeted subsidies. Food and fuel prices have a significant impact on people in poor countries because food represents a larger share of what poorer consumers buy, new IMF research said. It has urged countries to avoid measures that distort markets including price controls, which could cause food shortages.

- Higher food prices are already starting to have a progressively larger impact on poorer countries. Even consumers in the wealthier economies are starting to feel the pinch. See part 2 of my guide to beating inflation for some ideas on fighting food price inflation.

See also :

1. Soaring rice prices hurting Asia's neediest nations
2. PM Lee : Singapore government will help mitigate food cost inflation
3. NTUC chief urges Singaporeans to be prepared to live with higher fuel, food prices
4. Why food costs more
5. World grain stocks fall to 57 days of consumption

(2008-03-25 14:49:05 SGT) [Biz] Permalink

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