Climbing food prices, inflation add millions to poverty : ADB

by Commodity Online

Asian Development Bank, (ADB) Tuesday said climbing food prices and inflation rates threaten to push millions of Asians into extreme poverty and cut economic growth of the region.

In a report released here, ADB said global food prices that surged by more than 30 percent in the first two months of the year while domestic food inflation in many Asian economies has averaged 10 percent early this year.

Inflation rates are likely to continue because of the global oil hikes, production shortfalls due to bad weather and export restrictions by several food producing countries, the report added.

The fast increases in the cost of food are a serious setback for the region that has rebounded rapidly from the global economic crisis. Pressure on world food prices is not likely to easy anytime soon, the ADB said.

A 10 percent increase in domestic food prices could push 64 million people into poverty, the bank estimated, adding that it will also erode the living standards of families already living in poverty.

If higher food and oil prices persist for the rest of the year, economic growth in developing Asian countries could be reduced by as much as 1.5 percentage points, the report said.

ADB said food export bans should be avoided and greater investments made in agriculture.

Poor families in Asia are hit much harder by food price inflation because they spend as much as 60 percent of their income on food, much higher than in developed countries.

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