Global food prices highest in two years on costlier wheat: FAO

The FAO Food Price Index (FFPI) averaged 176 points in August, up nearly nine points from July, the UN body said in a statement released from its headquarters in Rome. "The increase -- five per cent -- brought the index up to its highest level since September 2008, but still 38 per cent down from its peak in June, 2008," it added.

FAO said the "sudden sharp rise" in international wheat prices was because of the drought in Russia and the country's subsequent restrictions on wheat sales. This apart, other drivers which fuelled the price rise are higher sugar and oilseed prices.

Meanwhile, the UN body recently lowered its global wheat production forecast to 646 million tonnes. "The latest revision reflects a further cut in the estimate of this year's harvest in the Russian Federation to 43 million tonnes (from 48 million tonnes in August), more than offsetting higher forecasts for crops in a number of other countries, including the United States and China," it said.

The forecast for world wheat stocks, ending 2011, was also lowered to 181 million tonnes, down 9 per cent from their eight-year high opening level.