Since several months, food prices are rising again after a year of sometimes sharp price falls. In August 2010, producer prices of food commodities were 7.5 percent higher than one year ago. Consumer prices rose by 1.4 percent.
Consumer prices and producer prices of food commodities
Producer prices are closely linked to world market food prices. Food prices on the global market varied considerably in recent years. In 2007 and 2008, world market prices of elementary food products like grain, maize and rice soared sky-high. Subsequently, prices plummeted in 2009 and started to rise again in 2010. The fires sweeping Russia in the summer of 2010 pushed up grain prices. Disappointing fruit and potato crops also contributed to higher food prices.
Producer price developments eventually affect consumer prices, but the long production and distribution chain from farmer to consumer slows this affect down. Trade and transport margins also have a mitigating effect on consumer prices.
Peter Hein van Mulligen