Global Food Prices

Global food prices continue to rise. The World Bank's food price index increased by 15% between October 2010 and January 2011 and is only 3% below its 2008 peak. The last six months have seen sharp increases in the global prices of wheat, maize, sugar and edible oils, with a relatively smaller increase in rice prices. Higher global wheat prices have fed into significant increases in local wheat prices in many countries. Higher maize, sugar, and oil prices have contributed to increase the costs of various types of food, though local maize prices have largely been stable in Sub- Saharan Africa. Local rice prices have increased in line with global prices in some large rice-consuming Asian countries. These food price rises create macro vulnerabilities, particularly for countries with a high share of food imports and limited fiscal space, as well as increases in poverty. Estimates of those who fall into, and move out of, poverty as a result of price rises since June 2010 show there is a net increase in extreme poverty of about 44 million people in low- and middle-income countries. In the immediate term, it is important to ensure that further increases in poverty are curtailed by taking measures that calm jittery markets and by scaling up safety net and nutritional programs. Investments in raising environmentally sustainable agricultural productivity, better risk-management tools, less food intensive biofuel technologies, and climate change adaptation measures are all necessary over the medium term to mitigate the impact of expected food price volatility on the most vulnerable. Related Content

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Global food prices continue to rise, though not uniformly for all grains. The World Bank's food price index rose by 15% between October 2010 and January 2011, is 29% above its level a year earlier, and only 3% below its June 2008 peak (figure 1). A breakdown of the index shows that the grain price index remains 16% below its peak mainly due to relatively stable rice prices, which are significantly lower than in 2008. The increase over the last quarter is driven largely by increases in the price of sugar (20%), fats and oils (22%), wheat (20%), and maize (12%).

Among grains, global wheat prices have increased the most in recent months. A confluence of weather shocks to various large producing countries, followed in some cases by export restrictions, curtailed supply and caused wheat