Food prices are finally coming down after a year of spikes and high volatility. But we must remain vigilant. Prices of certain foods remain very high, and millions of people around the world are still at risk of suffering from malnutrition and hunger.

Let’s get to the numbers first. According to the World Bank’s latest Food Price Watch quarterly report released this week, global food prices declined 8 percent between September and December of 2011 due to increasing supplies and continuing uncertainty about the global economy. So in December 2011, the World Bank Food Price Index closed 7 percent below the December 2010 levels, and 14 percent lower than its February peak. Yet, the 2011 index average is 24 percent higher than the year before, and domestic prices of key staples remain dangerously high in many countries.

Take the case of maize. In Mexico, for instance, maize was up 106 percent from December 2010 to December 2011, making tortillas more expensive. The price of wheat in Belarus went up 88 percent, and sorghum increased 57 percent in Burkina Faso. No matter where you look, someone somewhere is paying more money to put food on the table, whether it is Mexican quesadillas or Burkinabe “to” (porridge).

It’s true that high food prices are not bad for everybody. While the poor in urban areas and rural net consumers of food are usually threatened the most, farm producers tend to benefit. Yet when there is so much price volatility--as we experienced last year--uncertainty very often gets in the way of reaping any gains.

As the world struggles to recover from the financial crisis, developing and developed countries alike depend on effective finance ministries and their associated central finance agencies (CFAs) to help deliver good fiscal outcomes. Although ministries of finance usually assume the most prominent role at the country level, supporting CFAs can assume responsibility for a number of essential duties, including macroeconomic forecasting, tax policy, budget preparation, and debt management—just to name few. Given the importance of these functions in times of crisis, enhancing the capability of these agencies in developing countries is more urgent now than ever.

According to the World Bank’s recently released Global Economic Prospects report, Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects, and developing countries should prepare for further downside risks. Moreover, the report notes that developing countries have less fiscal and monetary space for remedial measures than they did in 2008/09, and their ability to respond may be constrained if international finance dries up and global conditions deteriorate sharply.

Against this downgraded growth forecast, developing countries need to do everything they can to strengthen the capabilities of their CFAs. To do so, it is highly important to take a country’s political economy factors into account—that is, to analyze the interrelations of political and economic institutions and processes that influence national decision making.