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Impact of Food Prices on the Global Economy

Summary/Abstract: Since 2000, the world has been facing record high prices of food.. Those prices, because of the global increase and inflation, make the global economy more sensitive and instable. Because of their impact on inflation, distribution of income and poverty, high food prices are now becoming a greater concern than oil prices. As financial experts and analysts confirm, it will be very hard to overcome this kind of crisis in the coming months and avoid its potential consequences. When compared to earlier increases of food prices, more precisely those between 2005 and 2008, we can conclude that developing countries are more likely to see an increase in prices. Furthermore, because of the global trade policy and terms of trade, since January 2007 food prices are in excess of 10% of GDP in more than 15 countries, and space for expanding the macroeconomic area and for macroeconomic management is limited. In fact, constantly high food prices will make worse the pressure of inflation, which could cause more poverty in the world. Finally, the G-8 Finance Ministers have underlined that high food prices represent a serious problem for economic stability and growth, and that they could hinder progress of developing countries and transition economies.

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