Category Archives: Inflation

Model predicts global food price hike!

New England Complex Systems Institute (NECSI) released a new report boasting their food price model. The institute – using mathematical modeling – issued a report last year detailing that a rise in US ethanol consumption in conjunction with financial speculation explained the uptick in food prices during 2007-8 and 2010-11. Their new report extends the model to January 2012 and confirms the predictive validity of the food price model.

Source: NECSI

With this new development, I think it is reasonable to identify bio-fuels expansion and price volatility due to financial speculation as a major source of the global food crisis. For them to go unabated would mean a contiguous and constrained food supply, and in effect a secular rise in food prices- not considering environmental shocks (i.e. floods) that might drop in during June-September 2012.

Complete report found here.