(MSN) Recent headlines tell the story of a global spike in food prices. In the last few weeks we’ve seen riots in Algeria sparked by the cost of sugar and wheat. Mexico’s government bought corn futures to hedge against rising tortilla prices. Indian Prime Minister Manmohan Singh was forced to arrange onion imports from traditional enemy Pakistan. In a visit to a supermarket in Inner Mongolia, Chinese Premier Wen Jiabao promised shoppers that the government will control food price inflation now running at better than 11% annually.
It sure sounds like we’re headed back to the bad old days of 2008, when soaring food prices sparked riots around the globe. According to the food price index kept by the Food and Agriculture Organization of the United Nations, the prices of traded food staples such as wheat, corn and rice climbed 26% from June to November and are near the historic highs set in 2008.
What the world is seeing isn’t an anomaly, in my opinion. The peaks of 2008 and 2010 aren’t unusual events caused by a coincidence of bad weather and terrible (but common) government decisions to hoard key grains behind export bans. Those peaks are indeed extreme, but the long-term trend in food prices is upward. It’s the dip from the highs of 2008, as global consumers tightened their belts in response to the Great Recession, that’s actually the anomaly.