Even as developing countries struggle to feed their millions, developed countries are witnessing a fall in their food inflation.
In Pakistan for example, the Consumer Price Index (CPI) inflation rose by 25%, mainly on the back of unprecedented increase in the prices of essential food items during the month of October in current fiscal against the same month of previous year. Contrast this with the falling food inflation in economies like the U.K.
The World bank has said that despite weakening global demand that has pushed food and fuel prices down, many governments continue to pay a higher price than before to feed their starving millions. The global food import bill will rise 23% in 2008, with developing countries mostly bearing the brunt of increased import costs. Agricultural output will be affected to due to the slowdown in these countries that have been affected by drop in export demand, remittances and lower commodity prices.
The Food and Agriculture Organisation (FAO) has said in a report this week that a recent fall in food prices should not create "a false sense of security". It has said that the credit crisis could deepen the food crisis by next year. This will increase the number of hungry people in the world from the current estimate of 923 million, it said.
The World bank has said “For the very poor, reducing consumption from already very low levels, even for a short period, can have important long-term consequences.”
Scary picture this.