The UNs FAO says supplies of some crops could improve next year

The UN's FAO says supplies of some crops could improve next year

World food prices have climbed to their highest level for over two years, the UN's Food and Agriculture Organisation (FAO) has said.

The FAO said commodity price pressures show little sign of abating and food prices overall have undergone a surge.

In the FAO's latest Food Outlook Global Market Analysis, the organisation's index of food prices is at its highest level since July 2008 and only eight points off the record high noted in June 2008.

The index, which measures average monthly price changes for a basket of cereals, oils, dairy, meat and sugar, has risen 34 points since its last report in June.

Now the FAO fears consumers might have little choice but to continue to pay more for their food in future. It said the world had to remain vigilant against further supply shocks.

The report blamed the worsening outlook for crops in key producing nations and the weakening of the US dollar since mid-September.

However, the FAO expects supplies of major food crops in 2010/11, such as wheat and white maize, to be better than two years ago, mainly because of much larger reserves. 

The report says it is the size of next year's crops that will be critical in setting the tone for stability in international markets given the expectation of falling global inventories.