The worst drought in the United States and Russia has significantly raised cereal prices, which may trigger “agflation,” or commodity-induced inflation in Korea in the next four to six months.

Cereal prices jumped a whopping 16 percent in July from a month before, causing the Bank of Korea (BOK) and Goldman Sachs to predict Korea will be affected from late this year through early next year.

The BOK and Goldman Sachs have already warned that a global food crisis will raise overall consumer prices here from late this year through early 2013.

“It usually takes about six months for hikes in global grain markets to affect local consumer prices,” Lee Jae-rang, an official from BOK, said.

The central bank forecast next year’s inflation rate at 2.9 percent, up 0.2 percentage points, due to global grain price increases; while the global investment bank predicted that surging prices would raise Korea’s consumer-price inflation by up to 0.4 percentage points.

Experts also point out that the current global food crisis is different from previous cases.

“The current price hike is different from those in 2008 and 2010 because they were sparked by severe weather conditions not by soaring demand. At the same time, speculative investors have also raised grain prices on the futures market,” an official from the Korea Center for International Finance (KCIF) said.

According to the KCIF, the country’s food self-sufficiency rate, including rice, stood at 26.7 percent at the end of 2010; especially, the rate for wheat and corn remained only at 0.8 percent.

The Korea Rural Economic Institute predicted prices of flour and corn to jump 27 percent and 13.9 percent, respectively, from prices in the second quarter.

The fluctuations will jack up consumer-price inflation as they are used as raw materials for various processed foodstuffs such as noodles, bread and beer.

Prices of mixed feed for cows and pig are also expected to jump 8.8 percent, which will also result in a price increase for beef and pork. But the institute warned that the situation could be much worse than predicted.

“The estimation is based on data in July and we did not take price hikes in August into consideration,” an official from KREI said.

“So the consumer prices can increase more, depending on global grain prices in the future.”

With signs detected for serious agflation, the government has been on alert, because locally-produced food costs have already been driven higher due to a prolonged drought.

Local food prices rose 6.4 percent in May from a year earlier, the third-fastest growth among the member countries of the Organization for Economic Cooperation and Development, whose average stood at 2.6 percent that month.

The government is considering importing wheat and soybeans without tariffs and increasing stockpiles of wheat, soybean and corn as well as rice. It has also requested related businesses to refrain from increasing prices.

“We’re now closely monitoring grain prices in the global market, and we will come up with measures to minimize the impact from any hikes,” an official from the Ministry of Food, Agriculture and Fisheries said.

But to fundamentally tackle a repeated food crisis, experts argue the country should increase its food self-sufficiency rate over the long-term.

“Agflation will take place routinely as demand for grain in emerging economies increases, while grain harvests in major far