UPSC Articles
Global food price index rises to 10- year high
Part of: GS Prelims and GS -II – Policies and interventions and International Relations
In news
- Food and Agricultural Organisation’s (FAO) food price index (FPI) rose at their fastest monthly rate in a Decade in May.
- However, world cereal production is on its way to reach a new record.
Reasons for this inflation
- Revived demand in some countries.
- A backlog of low production
- Market and supply disruptions due to restrictions on movement due to COVID-19
Impact of the inflation
- Higher inflation will affect poor countries dependent on imports.
- Huge Multi-National Companies such as Nestlé and Coca-Cola could pass on increased prices of their raw materials to consumers.
What is inflation?
- It measures the average price change in a basket of commodities and services over time.
- However, a certain level of inflation is required in the economy to ensure that expenditure is promoted and hoarding money through savings is demotivated.
Important value additions
- FPI is released by Food and Agriculture Organisation
- It is a measure of the monthly change in international prices of a basket of food commodities.
- It consists of the average of five commodity group price indices- cereals, oilseeds, dairy products, meat and sugar.
- It is weighted with the average export shares of each of the groups
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