A benchmark variety of Thai rice, a food stable across much of Asia, is at about US$1,000 a tonne, up threefold from last year. Meat prices have risen by 60 percent in Bangladesh in the year ending in March, and by 45 percent in Cambodia and 30 percent in the Philippines. The rise in global food prices has sparked riots last month in Egypt and Haiti, protests in other countries and restrictions on food exports in Brazil, Vietnam, India and Egypt.

In the first months of 2008, food price inflation has hit double digits in Bangladesh; People’s Republic of China (PRC); Hong Kong, China; Indonesia; Pakistan; and Viet Nam. Food price inflation is also rising in India, Malaysia, Philippines, Singapore, and Thailand. And although no 2008 figures are yet available for Sri Lanka, there is little doubt that food prices are also rising at double digits there as well. Wheat-dependent countries in Central and West Asia are also experiencing double-digit rates of food inflation says an Asian Development bank report on rising food prices.

The problem is not confined to importing countries, as net exporters are also experiencing food price inflation. In fact, the rising inflation pressure has been more intense in net exporting countries.

The explosion in food prices across the region is a threat to macroeconomic stability through inflation, the rising fiscal cost of food subsidies, and the possible exchange rate depreciation in food importing countries. The rate of inflation measured by the Consumer Price Index (CPI) in 2007 accelerated in developing Asia to 4.3 percent, up from 3.3 percent in 2006, and currently is forecast to surge further in 2008 to 4.8 percent (ADB 2008). The fiscal burden of food subsidies will mount in 2008 given the sharp rise in food prices that is occurring across the region. Already, some rice-importing countries are experiencing weakening currencies against the US dollar, which threatens to push inflation rates even higher in 2008.

To read the entire report log onto: http://www.adb.org/Documents/reports/food-prices-inflation/food-prices-inflation.pdf

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