RISING FOOD PRICES AND THE IMPORTANCE OF FUNDAMENTAL CHANGE
The sharp increase in global food prices and their consequences raises some fundamental questions about the state of the world economy and how we organise our lives.
According to the UN’s Food and Agricultural Organisation (FAO) its food price index hit an all-time high in December 2010. It was partly because of soaring prices that 925 million people worldwide suffered from hunger in 2010, an increase of 150 million since 1995-97. There have been mass protests and riots in a number of countries, including Algeria and Jordan. The escalating cost of bread was one of the many factors that led to the ouster of the Tunisian dictator, Zine-El-Abidine Ben Ali, by the people on 14 January 2011. In other countries, such as India and China the inflationary trend in food prices has forced their central banks to push up interest rates. This will have repercussions for their pace of growth which in turn may affect the global economic recovery.
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Inflation is definitely a threat, only cure is to raise interest rate if the cause is demand-push.It goes one cycle.
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