IDB warns of impact of rising food prices on region

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WASHINGTON, United States, Monday May 2, 2011 – Rising international food prices could trigger an acceleration of inflation in several countries in Latin America and the Caribbean this year, highlighting the need for policies to protect the urban poor, according to a new study by Inter-American Development Bank (IDB).

And it warned that the urban poor that do not have access to any enhanced income from self-grown products are most at risk from the food price shock.

Also expected to be hard hit by higher international food prices are net food importers with a greater share of spending concentrated on tradable foodstuffs and with little room to let their currency appreciate. 

“There is a need to increase and improve targeting of aid, perhaps through reformed conditional cash transfer schemes, to these groups to compensate the effect of the food price surge,” according to the Policy Note published by the IDB’s Research Department. 

“How will the food price shock affect inflation in Latin America and the Caribbean.”

The report estimates the potential inflationary impact of higher international food and oil prices in the region and discusses policies that can be used to alleviate the impact of higher food prices on inflation. 

The study concludes that rising oil prices will only significantly affect inflation in a small number of countries in the region this year.

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