According to the latest Food Price Watch, global food prices increased 10% between June and July 2012 with staples such as wheat increasing 25% in the period. The crisis continues to have effects on food and nutrition security throughout South Asia. Bad weather, trade curbs, oil prices and bio-fuel diversions have all led to higher food prices, which destabilizes the incomes and food security of millions across the region.
While rising food prices risks higher core inflation in the developing countries, the volatility proportionally squeezes the poor with considerably detrimental effects for their nutrition outcomes. José Cuesta, Senior Economist at the World Bank said, "food prices increased sharply in the month of July…we see that the effects on poverty can reach up to 20% and the impact on the performance of children in school, their development and growth are not only transitory but can last a lifetime.”
Studies in the last few years in Afghanistan and elsewhere have confirmed that rises in the cost of food have led to a switch in consumption from nutrient rich foods, such as vegetables, meats and other proteins to nutrient-poor staples, such as rice and wheat. There is also evidence of children’s food intake being protected, typically at the cost of women’s consumption. When the effects of the crisis are more severe, households may also sell productive assets, take children out of school, and reduce expenses on health. “The poverty and nutritional impact of food price spikes on the poor is significant since they spend a larger fraction of their income on food than relatively better off individuals,” said Kalpana Kochhar, Chief Economist of the South Asia region of the World Bank in the South Asia Economic Focus on Food Inflation
While these are not preferred outcomes, they are sadly a reality for the many poor households that face rapidly fluctuating prices. Another South Asia report, Food Price Increases in South Asia: National Responses and Regional Dimensions found that households who previously were living not far above the poverty line are likely to have fallen into poverty as the result of higher food prices.
To continuously monitor such fluctuations, the World Bank’s Poverty Reduction and Equity Group produces its quarterly Food Price Watch which is complementary to the Food and Agriculture Organization (FAO’s) GIEWS Country Briefs on Food Security at the country level.