The FAO said sugar was the only commodity being monitored whose price had not risen [Reuters]

Global food prices have reached their highest point in 20 years and could increase further because of rising oil prices stemming from unrest in Libya and the Middle East, a UN agency has warned.

The Food and Agriculture Organisation (FAO) said in a statement on Thursday that its food price index was up 2.2 per cent last month, the highest record in both real, inflation-corrected terms and nominal terms since the agency started
monitoring prices two decades ago.

It is the eighth consecutive month that food prices have risen, the Rome-based agency said.

The increase was driven mostly by higher prices of cereals, meat and dairy products, the FAO said. Sugar was the only commodity of the groups being monitored whose price had not risen.

Oxfam International, a UK-based aid group, called the rise "deeply worrying".

Global price crisis

While skyrocketing food prices have been among the triggers for protests in Egypt, Tunisia and elsewhere, global oil prices were also viewed as a crucial variable by the FAO.

David Hallam, the director of the FAO's trade and market division, said: "Unexpected oil price spikes could further exacerbate an already precarious situation in food markets.

"This adds even more uncertainty concerning the price outlook just as plantings for crops in some of the major growing regions are about to start."

Abdolreza Abbassian, a senior grains economist with he FAO, said that oil prices affect food markets in many ways, from production to transport costs.

"The longer these prices remain high, the more we have to think that it could have a spillover effect into the grain sector, especially in coming weeks and months," Abbassian said

Oxfam urged governments to tackle the issue together with measures including curbing speculation, increasing transparency on food stocks and reversing the drive for biofuels.

Thierry Kesteloot, Oxfam's food policy adviser, said: "Millions more people are sliding into poverty as they struggle to afford basic food supplies.

"A sit-and-wait attitude among governments in the hope that there will be good harvests over the next few months means gambling with people's lives."