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Global food price index rises to 10- year high

  • IASbaba
  • June 8, 2021
  • 0
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Global food price index rises to 10- year high

Part of: GS Prelims and GS -II – Policies and interventions and International Relations 

In news

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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