A World Bank working paper suggests the increased use of biofuels has had a direct, powerful impact on the cost of living.
The paper was obtained by the U.K.'s Guardian newspaper and the results were published on Friday.
The report says that food prices have risen 75 per cent, according to the paper.
The study is a direct contradiction to claims by the U.S. that biofuels -- those made from plant products -- have only caused prices to rise by three per cent or less.
With many Western nations turning to biofuels to reduce their dependence on petroleum products, as well as cut down on greenhouse gas emissions, the report will come as a stunning rebuke.
The report, written by respected World Bank economist Don Mitchell, has not been published.
It argues that the U.S. position that rising food prices stem from economic growth in countries like China and India, simply isn't true.
And successive droughts in Australia haven't had a major impact either.
Instead, the report finds that the U.S. and EU's demand for biofuels has taken a significant bite out of the food supply, causing prices to rise.
In the U.K. since April, all gasoline and diesel has had to have a 2.5 per cent biofuel content.
The EU is considering making that a 10 per cent requirement by 2020.
"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," the report states.
The report finds these changes between 2002 and February 2008:
- Food basket prices rose 140 per cent.
- Rises in costs of energy and fertilizer caused a 15 per cent rise in food costs.
- Bio fuels caused a 75 per cent jump in food prices.
According to World Bank estimates, 100 million people worldwide have slipped below the poverty line as the result of skyrocketing food prices.
The paper suggests the damning report has been kept in-house in order to avoid embarrassing U.S. President George Bush at a time when the leaders of the Group of Eight industrialized nations prepare to meet in Japan next week.
Much of their talks will focus on high fuel and food prices.
