Global food prices are an increasing cause for concern, given that rising prices have a widespread effect on economic welfare. As well as hitting the poorest, rising food prices worsen inflationary expectations, distort trade flows, and increase the likelihood of rising interest rates. Apart from a brief fall in food prices during the global recession, rising demand and tight supply conditions have pushes prices to record levels.
Each month the FAO publishes its food price index (FFPI), which tracks the prices of five selected foods, including cereals, sugar, oils and fats, dairy products and meat. The FAO also publishes a biannual report - the Food Outlook - which provides a detailed analysis of current and future market conditions.
The index clearly shows that the effects of the global recession, which pushed food prices down during 2009, have now passed, and food prices have returned to their upward trend. In January 2011 the index reached a record level, with strong growth in sugar, cereals and oils and fats. By July 2012 the index had risen to 212.8.
See: Primary markets