Food prices and poverty rise together

A new article by Raúl Gutiérrez of IPS focuses anew on how rising food costs have led to an increase in poverty in El Salvador:

According to a World Food Programme (WFP) study, "Alza de precios, mercados e inseguridad alimentaria y nutricional en Centroamérica" (Price Rises, Markets and Food and Nutritional Security in Central America), more than 100,000 people in this country of 6.5 million slipped below the poverty line between September 2007 and June 2008.

The study, carried out among 850 people in 25 rural communities in 10 of the country’s 14 departments, reports that more than one million people in El Salvador, Guatemala, Honduras and Nicaragua fell into poverty in that period.

The Inter-American Development Bank (IDB) warned in August that more than 26 million people in Latin America and the Caribbean could fall into extreme poverty if food prices remain high.

The IDB report also projects that persistent high prices would drive up poverty rates, from 51.4 percent before the increase in food prices to 59.4 percent after the price increase, in Guatemala, for example.

It also predicts a rise in the poverty rate from 35.1 to 41.7 percent in El Salvador; 69.5 to 73.4 percent in Honduras; and 41.5 to 46.8 percent in Nicaragua.

Central America has been identified as "a particularly vulnerable region," because of its dependence on "food and fuel imports" -- two variables that produce inflation, WFP country director for El Salvador, Carlo Scaramella, told IPS.

World oil prices have recently been dropping as a consequence of the world economic downturn and this may provide some relief from inflation, but that is likely to be offset by declines in remittances from abroad, a lifeline of El Salvador's economy.