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The World Food Programme (WFP) started distributing food to 60,000 internally displaced people in South Sudan, according to the United Nations Mission in South Sudan (UNMISS). Credit: Reuters/Isaac Billy/UNMISS/Handout WASHINGTON | Tue Jan 31, 2012 9:04am EST WASHINGTON (Reuters) - Global food prices are set to decline further in 2012 as a weaker world economy dampens consumer demand while food supplies rise, the World Bank said on Tuesday, warning that a possible rise in oil prices could reverse the trend. The World Bank said prices have declined steadily but volatility has increased, including among staples like wheat, maize and rice. In some countries, domestic food prices are higher than levels in 2010, keeping pressure on poor households that spend the bulk of their income on food. The World Bank increased its monitoring of global food prices in 2009 during a food and energy price crisis that hit food-importing countries the hardest and highlighted the chronic underinvestment in agriculture in developing countries. The World Bank said its 2011 annual food price index shows prices are still 24 percent higher than in 2010 despite some decline. Global prices fell 8 percent in the three months from September to December 2011, ending the year 7 percent below December 2010 levels. "The worst food price increases may be over but we must remain vigilant," said Otaviano Canuto, the World Bank Group's vice president for Poverty Reduction and Economic Management. "Prices of certain foods remain dangerously high in many countries, leaving millions of people at risk of malnutrition and hunger." The Bank warned, however, that the steady decline in global food prices could be halted if weather patterns change, or if world oil prices rise, pushing up price volatility and demand for biofuels. Price volatility adds uncertainty and keeps prices high because farmers are unsure how to price their products. The World Bank's sister organization, the International Monetary Fund, warned last week that global crude oil prices could rise as much as 30 percent if Iran halts exports as a result of U.S. and European Union sanctions. Iran has threatened to block the Strait of Hormuz shipping route, which handles 20 percent of oil traded globally. (Reporting By Lesley Wroughton; editing by Jeffrey Benkoe) World Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. 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