Recent price hikes in food and energy could push more than 5 million people in Eastern Europe and Central Asia into poverty, the World Bank said on Friday.

The region's poor often spend half of their income on food. Having to use more of that income on feeding their families means fewer funds are available for families to save or invest.

"The poorest people in the region will suffer the most from the high food and energy price inflation, which reduces their purchasing power," said Yvonne Tsikata, director for poverty reduction and economic management of the World Bank's Europe and Central Asia region.

A mixed bag of factors have contributed to the price spike: temporary factors such as poor weather; permanent factors such as a changing diet in developing countries -- people are eating more meat -- that drive up commodity prices; and bio fuel policies that divert food crops.

The news comes amid a nascent recovery from the global economic downturn and at a time when many countries in the region continue to grapple with lower wages and higher unemployment.

Food inflation has hit the region's poorer countries hard -- the Kyrgyz Republic has seen prices jump by 27 percent and Georgia has seen a price hike of 23 percent, according to World Bank statistics.

If no measures are taken and unemployment continues at current rates, the Kyrgyz Republic could see an 11 percent rise in poverty levels; Armenia and Georgia could see a 9 percent increase; Tajikistan could experience an 8 percent poverty hike; and Moldova's poverty rate could jump 5 percent, according to the World Bank.

The World Bank recommended expanding social safety nets to keep people from sliding into poverty.

"In order to help cushion the impact of higher prices, governments in the region need to ensure that programs targeted to the poor get more funding as necessary, from government budgets," Tsikata said. "More funding will allow governments to increase the number of people covered in their programs and to better offset their losses."

Some countries have enacted trade restrictions on exports, but the World Bank warned against the implementation of such policies, arguing that they could hinder long term adjustment in markets and could worsen price volatility.

A RETURN OF GROWTH

Despite rising food prices, growth is returning to Eastern Europe and Central Asia after the region underwent a period of uneven economic improvement, the World Bank said. Countries such as Turkmenistan and Turkey showed strong growth while a handful of countries including Latvia and Romania saw negative growth.

The World Bank on Friday said every country in the region should see positive growth this year, although growth is more tepid in Central and Southeastern Europe.

A GLOBAL TREND

Rising food and energy prices in the region reflect a global trend, whereby global food inflation has surged 36 percent since a year ago and disproportionately hit developing countries. The rise in prices comes even as 44 million people worldwide have been thrust into poverty since June last year.

"With food prices, we are at a real tipping point," said World Bank Group President Robert Zoellick at a press briefing in Washington on Thursday.

"If the Food Price Index rises by just another 10 percent, we estimate that another 10 million people will fall into extreme poverty when people live on less than 1 dollar 25 cents per day," he said. "And a 30 percent increase would add 34 million people to the world's poor, who number 1.2 billion."

Zoellick said the G20 can play a leading role in helping to alleviate the problem, adding that the group of nations is working closely with the World Bank.

"Multilateralism must be focused on doing real things in the short term while building towards mid and longer term actions," he said.

France has made food a top priority for its presidency of the G20, he said, adding that the World Bank is working closely with the G20.

"I believe we can take a number of important steps that will help in two key areas: food price volatility and food security," he said.

The World Bank is also working on a new code of conduct for countries with regards to export bans, he said, adding that having better information on food stock quality and quantity would be beneficial.

The organization also supports the "pre-positioning of small, humanitarian food stocks, in places like the Horn of Africa, operated by the World Food Program," he said.

The World Bank also aims to help countries better manage agricultural risks and with quick support for people most vulnerable to health risks due to food shortages by "effective, targeted nutrition safety nets, rather than through mistaken price controls or broad-based wage increases," he said.

The World Bank is also investing 7 billion U.S. dollars a year in improving agricultural production, from seeds to irrigation to storage, he said.

"I think these goals are achievable in the coming months," he said. "I am looking for results at the meeting of G20 agriculture ministers in June in France."