K.S. Rajan (8 Jan 2011)
"Signs of the times"


Dear John 

The following matter may be of interest to our doves in view of its prophetic significance.

In Jesus


High food prices stoke riot fears


Food price inflation crossed 18 per cent in the week that ended on December 25, making it the costliest week in more than a year.

Those are the latest figures in, and the first week of the new year could have been as costly or costlier. Reuters reports: “Unseasonal rains have pushed up prices of vegetables such as onions and tomatoes in recent weeks.”

The food price index rose 18.32, and the fuel price index was at 11.63 per cent. The corresponding numbers in the previous week were 14.44 per cent and 11.63 per cent.

The government is worried, and admits it isn't doing much. "Inflation is high, food inflation is very high... we are not sure whether we have all the tools in hands to control food inflation," home minister P Chidambaram said on Thursday. He should know: he was the finance minister before he got his present job.

An Empowered Group of Ministers headed by finance minister Pranab Mukherjee indefinitely postponed a meeting to hike fuel prices.

But it is not just India that is reeling. Food prices have become a global worry, and global leaders are worried violence and rioting could break out if food becomes unaffordable.

Reuters reports: "Record high food prices are moving to the top of policymaker agendas, driven by fears it could stoke inflation, protectionism and unrest and dent consumer demand in key emerging economies. The United Nations ' food agency (FAO) said on Wednesday that food prices hit a record high last month, above 2008 levels when riots broke out in countries as far afield as Egypt , Cameroon and Haiti."

On India, the report says: "The Indian government has used a range of measures for years to ensure stable food prices, but since last year has boosted the release of national stocks of grains and has pledged to continue duty-free imports of crude vegetable oils."

While releasing warehouse stocks may help marginally, rising fuel and food prices are making it difficult for the Indian government to rein in food prices. Added to the supply problem is the problem of hoarding. TV channels have exposed how wholesalers are cashing in on the crisis by creating an artificial scarcity of vegetables and foodgrains.

Meanwhile, Pranab Mukherjee has been appealing to the states to remove "supply bottlenecks".
PTI reports that onions became dearer by 82.47 per cent since the week before, while egg, meat and fish became costlier by 20.83 per cent, fruits by 19.99 per cent and milk by 19.59 per cent.

Mukherjee believes the overall inflation is driven by an increase in prices of primary items like fruits and vegetables, milk, meat, poultry, eggs and fish.

A Royal Bank of Scotland report says inflation won't be reined in easily in 2011, and that higher rates are likely to harden.