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Food Price Watch January 2012

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Global food prices declined 8% between September and December 2011. Wheat, maize, and rice prices declined due to improved supply conditions, and among concerns regarding the global economy. However, global prices still remain high, with the 2011 annual food price index exceeding the 2010 annual index by 24 percent.

Prospects for a decline in 2012 prices are favorable on account of increasing supplies. Yet, global prices remain high and volatile, markets tight, and oil prices uncertain. There has been strong demand from deficit areas and production losses from La Niña have already occurred. Domestic food prices also remain high and volatile, and continue to show large differences from country to country.

Declining global prices should not diminish vigilant monitoring of food price movements. Because domestic food prices have remained high, households have adopted coping strategies. These strategies follow common patterns but are not universal. Coping strategies may partially offset some of the effects of crises, yet the nutritional consequences of food crises can quickly become devastating, especially in low-income countries with weak safety nets.