Food and Agriculture Organization
UN Food and Agriculture Organization (FAO) Food Price (FPI), rose in may at their fastest monthly rate in a decade even as world cereal production is on course to reach a new record high.
FPI , released by food and agriculture Organization (FAO) is a measure of the monthly change in international prices of basket of food commodities.
It consists of the average of five commodity group price indices- cereals, oilseeds, dairy ,meet and sugar, weighted with the average export of each of the groups.- Reasons Underscoring such inflation includes
- Renewed demand in some countries and a backlog of low production.
- Market and supply disruption due to restriction on movement have created local shortages and higher prices.
IMPACT
- Higher inflation will hit poorer countries reliant on imports for staple goods.
- MNC giants such as Nestle and Coca-Cola could pass on increased prices of raw martials to consumers.
INFLATION
- It measures the average price change in a basket of commodities and services over time .
- Inflation is indicative of the decrease in the purchasing power of currency resulting in higher cost of living. This ultimately to a deceleration in economic growth.
- However a certain level of inflation is required in the economy to ensure that expenditure is promoted and hoarding money through savings is demotivated.
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