Global Food Prices Rise 1.4 Percent Raising Crisis Concerns

Global food prices increased 1.4 percent in September after two stable months mainly due to rising dairy, meat and cereal prices, said UN's Food and Agricultural Organisation (FAO).

The FAO's price index, which takes stock of cereals, oil seeds, dairy, meat and sugar, jumped to 216 points from 213 in the previous month. Prices of sugar and oils have fallen.

The index shows a year on year fall by 9 points while remaining 22 points from the peak level of 238 points reached in February 2011. But the current level is around the same reported in 2008.

Meat prices rose prices rose 2.1 percent while dairy and cereal prices gained 7 and 1 percent. Following better harvests in Brazil, sugar prices dropped 4.2 percent while oils eased 0.4 percent

The FAO has also cut its forecast for cereal production this year. It expects 2.286 billion tonnes of cereal in September, down from the 2.295 billion tonnes predicted in August.

"Prices are remaining high... prices are sustained, it's highly unlikely we will see a normalisation of prices anytime soon," FAO senior economist Abdolreza Abbassian told Reuters.

He said the monthly rise may not necessarily mean an upward trend, but the prices are expected to remain more unstable in the coming months.

Concerns of a food crisis continue following the severe drought in the United States, which pushed up soya bean and corn prices along with droughts in Russia and parts of Europe.

Speaking to Reuters, Parmjit Singh, head of the food and drink sector at law firm Eversheds, said the increased prices may put more pressure on food businesses.

"Manufacturers and producers will naturally want to pass on increased costs to their clients but they will meet with stiff resistance from retailers who are reluctant to increase checkout prices for increasingly value-conscious customers," he said.