Food prices are not a topic we cover often cover, but then a note from Toscafund landed in our inbox arguing that there’s no impending food supply crisis. Indeed, worries about surging inflation are simply misplaced. The hedge fund’s Savvas Savouri argues that rising food demand from a growing global population will trigger a supply response, with technology facilitating it.
So there’s going to be more processed food, not less of it. Read more
Governments across the developing world are stockpiling food staples in an attempt to contain panic buying, inflation and social unrest, the FT reports. But the hoarding is driving agricultural commodity prices even higher. The cost of wheat, the world’s most important staple, reached a fresh two-and-a-half-year high on Thursday, after countries from Algeria to Saudi Arabia announced extraordinary purchases. Bangladesh and Indonesia joined the rush on Thursday, placing extraordinarily large rice orders. Traders said that Jakarta, which usually buys rice in 200,000-tonne allotments, tendered for more than 800,000 tonnes. Bangladesh added that it would double rice purchases this year.
One of the G20′s most active monetary policy tighteners has had to raise rates again in response to inflation and overheating, the FT reports. The Reserve Bank of India raised its policy rate by 25bps and brought repo rates to their highest since early 2008, building on six key rate rises during 2010. However, inflation has not fallen as quickly as expected. December’s wholesale price index rose 8.4 per cent, from 7.5 per cent in the previous month. India’s Sensex stock exchange has fallen 6 per cent this year on the inflation concerns. Despite the warning signs flashing over prices forcing households to cut spending, emerging-market consumer stocks are being valued at record highs, Bloomberg says.