ECONOMICS

Recent Trends In World Food Prices

Recent Trends In World Food Prices

Commodity Food Price Index

The commodity price index is something that is needed to be looked and it must be understood initially. It is a fixed weight index and it takes into account the average of the selected commodity prices (Baffes, 2007, p.134). The prices might be based on the future or spot prices. The representation of the broad commodity of the asset class is taken care of. There is specific subset of the commodities that is needed to be looked at. Like most of the other indices, it tracks and measures the performance of the commodity market and the way it is functioning. The method and the way they are working are also needed to be looked at. The future prices are not being reported. The price projections for the next years are being looked at. The individual commodity prices are calculated at the initial level (Baier et al, 2009, p.967). The importance of indices in Economics cannot be ignored at any cost.

IMF Commodity Food Price Index

An index that maintains the prices of the food commodities and at the same time, it also tracks down the prices of the international traded food commodities. The reports the benchmark prices of the food commodities that are prevailing in the global market but also at the same time, it takes care of the global representation of the food market and the food prices. The base price of the index is calculated at the basis of the benchmark food prices. The base year if one looks at it is the price of 2005 (Roache, 2010, p.29). The prices are calculated on the basis of the base year of 2005.

It takes care of the measure of the monthly changes in the prices of the food commodities but also at the same times. It look and monitors the prices of the basket of the food commodities that are ground on the basis of five price indices. The way it works is that the monthly change in the prices of the basket of the food commodities is being looked at (Caceres et al, 2013, p.275). The representation of the 35 quotations is being looked. The change in price of the cereals, oil seeds, dairy and meat and sugar is being looked at as they are some of the commodities that give trend to the whole thing.

Methodology and Calculation Method

They are calculated mostly on the basis of USA dollar. They might also be calculated on the basis of SDR terms, the priced being based on the series of currencies and the base year as mentioned above is 2005 (Baffes, 2007, p.134). The calculation is carried out in the manner as the weighted averages of the individual commodity prices is being looked at. As far as the way weights are constructed, it has to be kept in mind that the weights are calculated on the basis of every 5 years (Sundaram, 2013, ...