Food prices vary but crisis remains

Andrew Walker
BBC World Service economics correspondent

Some prices have fallen but they are still relatively high

Has the food crisis gone away?

By some measures food prices have come down, but there is still a problem for many people, especially those on low incomes.

A BBC World Service index of retail food prices has actually gone up in the 10 months since it was launched.

It is based on a check of some basic foods in eight cities, including Washington, Nairobi and Buenos Aires. It is not comprehensive but useful nonetheless.

The average for all the cities covered is up by 8% from July last year.

But there are some striking variations.

In Nairobi, there was a rise of getting on for fifty per cent. In Brussels and Washington, where general levels of inflation are lower, the food prices we checked recorded double digit falls.

International markets

Where there clearly is evidence of falling food prices is in international commodity markets.

That does to some extent feed into consumer prices, but there are plenty of other factors too.

These prices are still pretty high by some standards

In that area, there is a very clear decline, which shows up in an index produced by the United Nations' Food and Agriculture Organisation (the FAO). It's based on international prices for meat, dairy, cereals, sugar and oils and fats.

The most recent figure, for April, is slightly up from the previous two months, but is lower by a third from the high it reached in June last year. The decline is particularly striking for dairy foods, which are down by more than half.

In the World Service survey, those declines were reflected to some degree in the shops in Brussels and Washington.

How much you pay depends on where you live

It is likely that in the other countries, consumer prices would have increased even more, had there not been these declines in commodity markets.

Still steep

Welcome though the declines in commodity markets may be to consumers, those prices are still pretty high by some standards.

The FAO index is nearly 50% higher than it was in 2003. And the price of cereals is up eighty per cent in the same period. That includes wheat, corn and rice, which are staple foods for many people.

So for consumers, there have been some encouraging developments on food prices.

The most intense phase of the crisis may have passed.

But add in the financial crisis and the economic damage that is doing to the developing world and you still have a difficult problem.