Food price increases have been caused in part by drought in Australia and central Europe, as well as increased demand for food in Asian countries, Dominique Strauss-Kahn, the IMF's managing director, said on Thursday.
"Food prices, for instance, increased by 48 per cent since the end of 2006 until now, which is a huge increase, and it may undermine all the gains we have obtained in reducing poverty," he said.
Strauss-Kahn's comments came on the eve of a meeting of finance ministers and central bank chiefs of the Group of Seven (G7) industrialised countries in Washington DC.
Biofuels link
The increased use of grains to produce biofuels, first heralded as a way to cut greenhouse gases, has been blamed for contribruting to rises in the cost of basic foods.
Starvation fears in Bangladesh
A rising demand for food in emerging market economies has further contributed to grain shortages.
The IMF has calculated that corn ethanol production in the US accounted for at least half the rise in world corn demand in each of the past three years.
Washington provides a subsidy of $0.51 per gallon to ethanol blenders and imposes a tariff of $0.54 per gallon on imports.
In the European Union (EU), most countries exempt biofuels from some gas taxes and impose an average tariff equal to more than $0.70 per gallon of imported ethanol.
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Tens of thousands of people took to the streets to protest against the food price increases.
Four were killed in the disturbances, while UN peacekeepers used rubber bullets and tear gas to drive away rioters from the presidential palace.
Rising bread prices in Egypt have contributedto protests that led to several deaths [EPA]
The UN World Food Programme has said it requires $500m just to fill immediate need.The World Bank says food price inflation is not a short-term phenomenon but will likely persist through 2008 and 2009 before demand slackens due to high prices.
Most people in the world's wealthiest countries take food for granted.
Even the poorest fifth of households in the US spend only 16 per cent of their budget on food.
In contrast, Nigerian families spend 73 per cent of their budgets on eating, Vietnamese 65 per cent, while Indonesians allocate about 50 per cent.
Last year, the food import bill of developing countries rose by 25 per cent as food prices rose to levels not seen in a generation.Food commodities
World financers have also contibuted to the food price problem.
"In many developing countries, the poor spend up to 75 percent of their income on food."
Robert Zoellick, World Bank President
Commodities have attracted investors looking for a safe haven from failing investments in the highly-leverage mortgage sector.
Amid this speculation, world wheat prices rose 70 per cent between 2005 and 2007.
In the same period, corn gained 80 per cent in value, while dairy prices nearly doubled.