According to the UN Food and Agriculture Organization, the global food price index hit 214.7 in December, surpassing June 2008’s record high of 213.5. From November to December alone, food prices rose by 4.2%. As a result, food riots have broken out in places such as Algeria, Tunisia, India, China, Indonesia, and Bangladesh.
In the United States, the latest Marketbasket Survey, which monitors 16 different food items, revealed an approximately 2% rise from the 3rd to 4th quarter in 2010. Compared to a year ago, the total average price was about 10% higher.
With official unemployment at over 9% and wages practically stagnant, rising food prices could prove an excessive financial burden for millions of American families. And if the National Inflation Association turns out to be right, food inflation will become America’s top crisis in 2011.
Various economists blame extreme weather events, rising demand from emerging markets, and central bank money printing for the precipitious rise in food prices. One thing is certain. If price increases continue to accelerate, another major economic crisis won’t be far behind.