Global food prices fell by 7.0 percent in 2012 from the level the previous year, the UN's Food and Agriculture Organisation said on Thursday, assuaging worries a few months ago that the world could be heading for a food crisis.

The FAO added that prices had fallen in December for the third month in a row.

The Rome-based FAO's Food Price Index averaged 212 points in 2012, a drop of 7.0 percent owing largely to falls in the prices of sugar, dairy products and oil.

According to the FAO's index, a monthly measure of changes in a basket of food commodities, prices dropped in December by 1.1 percent to 209 points, continuing a descent from the 263 points registered in August.

"The result marks a reversal from the situation last July, when sharply rising prices prompted fears of a new food crisis," said Jomo Sundaram from FAO's Economic and Social Development Department.

"But international coordination...as well as flagging demand in a stagnant international economy, helped ensure the price spike was short-lived and calmed markets so that 2012 prices ended up below the previous year’s levels," he said.

After surging between July and September 2012 due to uncertainties over production and tightening supplies, cereal export prices then dropped because of weaker demand for feed and industrial uses.

The sharpest declines registered in 2012 were for sugar (17.1 percent), dairy products (14.5 percent) and oils (10.7 percent), while decreases were much more modest for cereals (2.4 percent) and meat (1.1 percent).

In December, the FAO oils index averaged 197 points (down 1.9 percent on November), while the meat index averaged 176 points and the sugar index averaged 274 points -- both marginally down on the previous month. AFP