Asia prepares for food price shock
TheExtinctionProtocol.com
August 17, 2012
ECONOMY – Since mid-June, grains, namely corn, soybeans and wheat have rallied 38 percent, 24 percent and 45 percent, respectively, after the worst U.S. drought in a half a century wiped out crops in the world’s biggest agricultural exporter. This prompted warnings from United Nations that the world could see a repeat of the food scare seen in 2008 as prices rose too rapidly, and officials from the Group of 20 countries to plan a meeting to discuss ways to cope with the price spikes. While grain prices fell in New York on Tuesday because of rain across most of the Mid-West, prices will persist around current high levels, economists from Standard Chartered said in a report published this week. This is especially the case should high temperatures persist across much of the U.S. well into August, they said. “If the price rises are sustained in the months ahead, we expect higher global food prices to affect Asia in early 2013, as our correlation analysis suggests a time lag of five to seven months for most Asian economies,” according Tai Hui, Head of Regional Research for Asia with Standard Chartered. Asia was hit hard in 2007 and 2008 when shortages of foodstuffs, especially rice, led to hoarding and riots. Food inflation hits Asia harder than other regions food make up a greater portion of consumer spending than in other parts of the world. In developing Asia, for example, it makes up 35 percent of consumer prices, compared with about 20 percent in the U.S. and Europe, according to the International Monetary Fund. Economists at Nomura also raised the alarm on inflation in Asia last week, saying that large moves in global commodity prices could have an “acute” impact on Asia, given that the food component in CPI is very large”. Food prices are far more important than energy prices in driving Asian inflation – the weighting of food items is typically two to three times larger than that of energy items in Asian CPI baskets. Food inflation will start hurting Asian economies by the end of the year if the current high prices are sustained over the next few months, with Vietnam, China and Hong Kong the most vulnerable, economists tell CNBC. –CNBC
