By Hossein Askari and Noureddine Krichene
Food and energy prices are raging upwards once again, forcing governments in China, India, Brazil, Russia, and others to ring the alarm bells. The United Nations Food and Agricultural Organization (FAO) has announced that in December 2010 food price inflation broke records, with the world food price index exceeding its peak level of 2008.
With gold prices racing beyond $1,400/ounce, rising by 30% in 2010, oil prices about to cross the $100/barrel, rising by 25% in 2010, and the US dollar crumbling, it is hardly surprising to see food prices also explode at alarming rates.
In contrast to their counterparts in many leading countries, US policymakers do not appear alarmed by energy and food price inflation; in fact, it has hardly made it onto their agenda. Even though prices of sugar, wheat, corn, coffee, soybeans, and many other basic food, such as onions and cooking oil, rose at rates ranging between 60%-80% in 2010, this inflation seems to have been of little concern to the Federal Reserve.
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