:. Food Industry News


High Prices Putting Nations Under Strain, IMF Says

Source: Reuters
01/07/2008

Washington, 1 July, 2008 - Surging food and fuel prices have pushed some countries to a "tipping point," the IMF warned Tuesday, with trade balances at risk of serious deterioration and budgets under strain.

Daily News Alerts

"Some countries are at a tipping point. If food prices rise further and oil prices just stay the same, then some governments will be unable to feed people and at the same time maintain stability of their economy," International Monetary Fund Managing Director Dominique Strauss-Kahn said at a briefing on IMF research on food and fuel inflation.

In one paper, the fund said that until recently the sharp run-up in commodity prices had had only a limited effect on countries' balance of payments, but that larger impacts were now being felt and inflation was putting budgets under stress.

The IMF said oil and food prices were likely to ease only slightly as supply caught up, but admitted there was a lot of uncertainty in the outlook.

"The food and fuel price surges have greatly raised the policy challenges associated with reducing poverty, ensuring food security and maintaining macroeconomic stability," the IMF said.

The fund said countries should strive to protect the poor by expanding social programs, but that they should avoid steps that could result in economic instability.

The IMF said there was scope in some countries to loosen budgets and free-up social spending, but that others might need to limit their response or seek outside help.

The fund said central banks should tolerate so-called first-round inflation in which commodity prices push up the overall rate of inflation, but that they should seek to ensure prices of other goods and services do not trend higher.

Should inflation look as though it was settling in, countries which are net importers of food and fuel may need to allow their currency to depreciate on an inflation-adjusted basis, the IMF said.

It said global food inflation almost doubled in 2007. While food inflation in major industrial nations was relatively low -- around 3 percent -- it reached 10 percent in developing countries and would have been higher without food subsidies.

Preliminary data show that the median 12-month rate of food inflation for 120 developing countries rose to 12 percent at the end of March 2008 from 10 percent at the end of last year.

Meanwhile, median fuel price inflation is up by 2.3 percentage points, from 6.7 percent at the end of 2007 to 9 percent in March. Actual 12-month inflation in March 2008 exceeded IMF staff projections for the end of 2008 by more than one percentage point, the IMF said.

The IMF said addressing higher fuel and food prices required a coordinated response by countries, donors and international agencies.

It would likely take some time for food prices to move lower because any pick-up in production would be offset by an expected increase in biofuels output and strong growth in emerging and developing countries, the fund added.

"A lasting supply response is likely to be gradual and depend on improved policy frameworks," the IMF said.

It said a slowdown in economic growth in developed countries has had less of an impact on commodity prices than in the past, because so much of the demand was coming from the developing world.



GO   View more articles on this subject

Email This Article To A Colleague     Print A Copy Of This Page
 
 
 
 
FLEXNEWS - Business News for the Food Industry

About Us | Contact Us | Terms & Conditions | Privacy Policy
 
Daily News Alerts
Related Items
Study Urges Speculation Rules to Ease Food Crisis
EU's Mandelson Points at U.S. After WTO Collapse
Recriminations Fly Across Asia as WTO Talks Fail
Yen Rises Ahead of Central Bank Rate Decisions
ING Likes Food, Pharma, Telecom, Stocks for 2009
Food Shares Set to Outperform, Chemical Shares to Slide...
Stocks Hit 5-½ Yr Lows on Economic Fears
Nomura Chief Says Global Liquidity Crisis is Over
FAO Food, Agri Commodities Indexes Fall in Oct
EU Says Doha Deal Possible Within Weeks

More in Food Industry News
UK: Bidders Circle Troubled Woolworths
UK: Confectionery Firm Zetar Could Lose 3% of Turnover...
Ardo Confirms Take-Over of Austria Frost
Carrefour Still Planning Indian Joint Ventures
First Burger King Restaurant Opens in Czech Republic
Hong Kong Sets Maximum Standards for Melamine in Food
Drought Sends Saffron Price Skyrocketing
Thai Govt to Sell 1.37 Million Tonnes Rice Stocks
Aryzta Q1 Revenue up 32 pct
China Lifts Price Controls on Food -NDRC

Top Headlines
UK: Bidders Circle Troubled Woolworths
UK: Confectionery Firm Zetar Could Lose 3% of Turnover...
Ardo Confirms Take-Over of Austria Frost
Oil-and-Fat Composition for Spray, and Method for Production...
Carrefour Still Planning Indian Joint Ventures
Hong Kong Sets Maximum Standards for Melamine in Food
Drought Sends Saffron Price Skyrocketing
Thai Govt to Sell 1.37 Million Tonnes Rice Stocks
Aryzta Q1 Revenue up 32 pct
China Lifts Price Controls on Food -NDRC
SABMiller Looks for Growth in India's Beer Market
Massachusetts Firm Recalls Ready-To-Eat Frozen Beef...
Singapore Food's Majority Shareholder in Talks to Sell...
Coke's Europe Chief Sees Slower Growth Amid Crisis
FDA Defends U.S. Infant Formula; Sets Safe Level
Russia's X5 Retail Group Q3 Net Loss $14.7 Mln
Canada: Health Authorities Say Milk Formula Safe Despite...
Taste Potentiator Compositions in Oral Delivery Systems
Enzyme Preparations Yielding a Clean Taste
T1R1 Receptor Binding Assays for Identification of...


 


FLEXNEWS 2008 - All rights reserved
ISSN 1950-6228