Global food prices continue to rise

Continuing a decade-long increase, global food prices rose 2.7 percent in 2012, reaching levels not seen since the 1960s and 1970s but still well below the price spike of 1974.

The price increases reverse a previous trend when real prices of food commodities declined at an average annual rate of 0.6 percent from 1960 to 1999, approaching historic lows, according to Worldwatch Institute's Vital Signs Online service.

Along with higher price levels, volatility has also increased dramatically in recent years. According to the United Nations Food and Agriculture Organization (FAO), the standard deviation—or measurement of variation from the average—for food prices between 1990 and 1999 was 7.7 index points, but it increased to 22.4 index points in the 2000–12 period.

Although food price volatility has increased in the last decade, it is not a new phenomenon. According to World Bank data, the standard deviation for food prices in 1960–99 was 11.9 index points higher than in 2000–12.

Some price volatility is inherent in agricultural commodities markets, as they are strongly influenced by weather shocks.

But the recent upward trend in food prices and volatility could be traced to additional factors including climate change, an increase in biofuels production, higher-than-normal imports, trade policies, low levels of stocks, rising energy and fertilizer prices, and increased trade within futures markets for food commodities.

International food price trends (measured in terms of consumer prices, not those paid to producers) varied by commodity in 2012.

Due to the ubiquity of corn, wheat, and rice in global diets, changes in the price of cereal grains generally affect consumers more than fluctuations in other foods.

Since food prices began increasing in the early 2000s, cereal prices have jumped more than 80 percent and exhibited significant volatility, according to the FAO.

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