Foodgrain prices have been witnessing a global upward trend for the past three years. Prices, which have risen 85% during the period, are a serious cause for concern, especially for Asia which alone is home to 1.20 billion poor people who spend more than 60% of their income on food. This upward trend of spiralling food prices has begun to jeopardise the Millenium Development Goal of halving poverty by 2015.

The factors that have hit the poor hard or are directly responsible for this price rise are growth of food demand, biofuel policies of the US and the EU, drought in wheat-producing countries -- Australia and Ukraine, and 'poor' government policies like export bans, import subsidies, speculative trading behaviour. Besides, according to IFPRI, rapid growth in income of middle-classes in India and China accounts for half of the recent price spiral. Given this background, the brief examines the magnitude of food price rise in the context of Sri Lanka and some of the reasons for the increase in prices mainly – production-related issues and trade and other macro economic policies.