Thursday, March 3, 2011

UN: Food Prices Climb at 26.4% Annualized Rate in February

World food prices rose 2.2% in February from the previous month (a 26.4% annulaized rate) to a record peak, according to the The Food and Agriculture Organization of the United Nations.

It is the eighth consecutive rise in the FAO food price index.

The index stood at 236 last month, the highest record in real and nominal terms since the agency started monitoring prices in 1990.

Bottom line: The money printing being done by central banks across the global is about to have its impact. There is no question that some of the food price increase can be attributed to non-monetary supply and demand factors, but price inflation caused by money printing always rears its ugly head at the weakest point. This time around it is with food prices. But the increases will go way beyond food, and the soaring stock market prices are proof plenty that a lot of this has to do with money printing pushing  prices higher.


  1. Wenzel,

    Did you read this piece by North? I couldn't tell what the hell he was talking about. He seemed to say both that central bank money printing/US printing wasn't causing food price rises but rather than real, organic wealth-inspired demand was causing it in EMs, while also saying that well, yes, actually the CBs are contributing.

    Confusing, maybe I read it wrong, but if you have seen it I'd be interested in your attempt to decipher and comment.

  2. He's really making Krugman's argument, but obviously you can't separate what is new demand and what is coming from money printing.

    The fact the stock market is so strong is evidence plenty that a lot of new money is impacting the economy.

    You are correct it does seem North wants to blame it all on new demand, but then hedges. Though he does it all in a confusing fashion.

  3. Nice to know it wasn't just me then. If I am going to be confused, it better be when Robert Wenzel is similarly confused.