FAO food index: World food prices still close to record high
Thursday, 08 September 2011 05:29
A new index released by the UN Food and Agriculture Organisation (FAO) reveals that global food prices are close to a record high.
The index was recorded at 231 points in August, just seven points short of the record high reached in February of 238 and up by 26 per cent on the same time last year. The index fell by one point from July.
The FAO records the prices of a range of staple foods such as cereals, sugar, dairy, meat and oilseeds.
Cereal prices rose substantially due to a poor crop of maize in the United States as a result of the hot summer weather. Production is expected to be six million tonnes less than predicted in July. However, overall output is still expected to be three per cent higher than last year, but will not be enough to stop inventories being used as global stocks are expected to remain low.
The high cost of food is likely to be a contributing factor to higher levels of inflation across the globe for the rest of the year. Earlier this year the high cost of food was one influence on the unrest seen in the Middle East and some North African countries.
Demand for food from emerging countries and a succession of bad harvests has seen the FAO’s food index increase by 44 per cent over the last two years.
The FAO said that only rice of the essential foods in the index is expected to see a significantly higher output. Production is expected to hit a record level of 479 million tonnes.
The FAO’s senior economist and grain analyst, Abdolreza Abbassian said: "The slight variations of the past two months are really marginal for us to be able to make any assessment about any decline that in any way would help countries combat food inflation.
"Things are going back to fundamentals. Fundamentals are tight and prices therefore are remaining high.”
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