Thursday, January 6, 2011

Food Price Index surpasses the spike in 2008

The FAO Food Price Index has surpassed the upper bound reached in 2008. Commodity-wise, price of sugar has been spiking since May 2009. Similarly, prices of cereals and oil & fats are also going up. Price of meat is stabilizing but still is higher than in December 2008. The price of dairy is reaching the level reached in December 2008. Here is an explanation of why we are not seeing riots and disruptions around the world as we saw in 2008: due to weak dollar as $ is used for world food prices, and people are used to higher food prices. Here is more on the FAO predicting the next food price shock.