Merrill Lynch says that rising food prices could trigger more riots in developing nations. They trace some of the problems back to the US recession, and the credit crunch:

Last month, the World Bank’s president, Robert Zoellick, suggested that 33 countries could erupt in social unrest following a rise of as much as 80% in food prices over three years.

Merrill’s report said the credit crunch has contributed to a global re-balancing, drawing to a close an era in which American consumers have been the primary drivers of the world’s economy.

In a gloomy set of forecasts, Merrill said it believes the US is in a recession - and that American house prices, which are among the root causes of the downturn, could fall by 15% over the next 18 months.

The bank said Britain’s economic outlook is “deteriorating” as consumer confidence weakens. The Office for National Statistics yesterday said that retail sales fell by 0.2% in April compared to March.

People have been on a housing-bender for years now, using skyrocketing prices to extract equity from their homes. But credit isn’t the only thing going on, as world demand for food (for livestock and biofuels) and oil has skyrocketed as well. The article ends with this piece of news:

Oil prices are expected to continue rising rapidly after hitting a third record in a row yesterday, as supply continues to outstrip demand.

Read more here: Surging inflation will stoke riots and conflict between nations, says report.