Thursday, March 3, 2011

UN: Food Prices Climb at 26.4% Annualized Rate in February

World food prices rose 2.2% in February from the previous month (a 26.4% annulaized rate) to a record peak, according to the The Food and Agriculture Organization of the United Nations.

It is the eighth consecutive rise in the FAO food price index.

The index stood at 236 last month, the highest record in real and nominal terms since the agency started monitoring prices in 1990.

Bottom line: The money printing being done by central banks across the global is about to have its impact. There is no question that some of the food price increase can be attributed to non-monetary supply and demand factors, but price inflation caused by money printing always rears its ugly head at the weakest point. This time around it is with food prices. But the increases will go way beyond food, and the soaring stock market prices are proof plenty that a lot of this has to do with money printing pushing  prices higher.


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Intrinsic Value said...

Imported food price is higher could be attributed to the depreciation of the USD. But if measure it in another currency you could have different results. China's inflation problem is the opposite of the US, where a currency that is kept artificially weak is driving higher food prices.

Similarly it is interesting to note that if you measure the oil price in another currency, it has not risen as much. For example the Oil price in Yen is still cost at equivalent to $65 per barrel.

Intrinsic Value: Comparison of current oil price adjusted for exchange rates