Global Biz
Record high food prices stoke fears for economy
(Agencies)
Updated: 2011-01-07 16:41
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SINGAPORE/LONDON - Record high food prices are moving to the top of policymaker agendas, driven by fears it could stoke inflation, protectionism and unrest and dent consumer demand in key emerging economies.
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In Asia, official data and analyst estimates both pointed to inflationary pressures. Chilli prices have increased fivefold in Indonesia in the last year and the country's president called for households to plant food in their own gardens.
President Susilo Yudhoyono Bambang told a cabinet meeting people should be "creative" in planting, with Trade Minister Mari Pangestu leading the way in planting at home.
"I have 200 chilli plants in flowerpots," Pangestu told a briefing on Thursday. "The agriculture ministry is informing farmers how to take care of the plant and also encouraging consumers to plant chilli in their own yards."
Surging food prices have often provoked unrest in urban areas of poor countries, where food makes up a high proportion of household purchases.
Analysts say African and Caribbean economies dependent on food exports could be particularly hard hit, helping stoke unrest and potentially pushing governments towards imposing export bans and expropriating foreign-owned farmland.
If Asian and other emerging consumers have to spend more of their income on food, other purchases will fall -- and that could be bad news for a global economy that has placed much of its hopes for recovery on consumption in developing economies.
World Bank President Robert Zoellick urged governments in a newspaper opinion column to avoid protectionist measures as food prices rose and called upon the Group of 20 leading economies to take steps to make sure the poor get adequate food supplies.
French President Nicolas Sarkozy has asked the World Bank to conduct urgent research on the impact of food prices ahead of G20 meetings later this year, a source familiar with the matter said.