Poor hit hardest by rising food cost

The world's biggest economies agreed on measures to calm soaring food prices as research revealed the impact of inflation on the lowest earners in the Emirates.

The world's biggest economies agreed measures to stabilise spiralling food prices yesterday as research revealed the impact of inflation on the lowest earners in the Emirates.

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Poor households are more than three times more vulnerable than the rich to rising commodity prices, according to the report by the Dubai Chamber of Commerce and Industry.

"What's conventionally found is that the poorest households bear the burden of food price increases," said Azzeddine Azzam, the report author and senior economic adviser to the chamber.

As a bigger proportion of their income goes on food, the purchasing power of poor households is more significantly eroded when prices rise, the report said.

Global food prices reached a record high this year as bad harvests and surging demand put pressure on food stocks. Anger at rising prices played a part in fuelling unrest in several countries in the Middle East and North Africa.

Since June last year, 44 million more people have been dragged into food poverty, the World Bank estimates.

Agriculture ministers from the Group of 20 (G20) leading and emerging economies yesterday agreed an action plan to curb food price volatility by boosting agricultural output and improving market transparency.

In response to what the French president Nicolas Sarkozy has called the "plague" of rising food prices, G20 ministers agreed to establish a database to provide accurate and timely information on crop supply, demand and food stocks.

As an importer of the majority of its food, the UAE is vulnerable to fluctuations in global markets.

The chamber's report assessed the impact on households of changes in the price of cereals, meat, fish, dairy products, oils, fruit and vegetables. It measured the average monthly income of households and how much they spent on food each month between 2005 and last year.

Price increases represented 1 per cent of the income of households with the highest earnings, the report found.

But these rises had a much bigger impact on poorer households, representing 3.5 per cent of their incomes. The research also showed the lowest earners spent a larger proportion of their overall finances on food.

The wealthiest households, earning on average US$14,800 (Dh54,360) per month, spent about 5.6 per cent of their overall income on food.

In contrast, expenditure on food accounted for 21.4 per cent of the overall budget of households in the lowest income bracket of an average $984 per month.