09/08/10 Stockholm, Sweden – Because of rapidly rising commodity costs the UK has experienced its quickest rate of food price inflation this year during the month of August, according to the British Real Consortium. In particular, wheat and sugar are two key ingredients behind steeply increasing expenses for food makers.
According to Bloomberg:
“Food prices rose an annual 3.8 percent, up from 2.5 percent the previous month and the most since July 2009, the BRC said in an e-mailed statement today in London, citing a survey by Nielsen. Shop-price inflation accelerated to 1.7 percent from 1.5 percent.
“Food prices are gaining as producers pass along higher costs of raw materials, the BRC said. Wheat prices have soared 53 percent in the last three months. Inflation may be limited as consumers tighten budgets before the government’s planned spending cuts and shops reduce prices to lure customers.
“‘As shoppers return from their summer holidays, many will review household budgets again,’ Mike Watkins, senior manager of retailer services at Nielsen, said in the statement. ‘We can expect to see retailers putting together some strong autumn promotions to tempt shoppers.’”
Overall, three commodities — including wheat, sugar, and also dairy — may see price increases of roughly 20 percent each over the course of the year. Though overall the inflation is not near the 10 percent peak back in August of 2008, it’s a creeping added expense that UK shoppers will have to face. You can read more details in Bloomberg’s coverage of how UK food prices are increasing at their fastest pace in a year.
Best,
Rocky Vega,
The Daily Reckoning
Rocky Vega
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let’s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
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Only 20%. The butter that I ‘used’ to buy is up over 56% since christmas. Still, not to worry, Plasma TV’s are coming down in price!!!!
It is inevitable.
Consider that in order for the quality of life to increase for 30% of the worlds population (asia, southeast asia etc…), the quality of life must be reduced elsewhere. Think of it in this manner, quality of life is a finite volume commodity. There is only so much.
Brilliant minds and brilliant leaders (typed with a tongue in cheek), believe that creating more “trading units” (currency) can increase the pool of “quality of life”. No so, virtual stores of wealth only become diluted.
Along with the rising quality of life across much of the globe comes an increase in purchasing power for what previously were luxuries (better food, meat, oil use, along with a host of other consumables…remember that word…”consumable”).
Coupled with a strong work ethic in these areas (how hard did one work for a bowl of rice? Now with the same effort I can get a steak dinner and cab fare? WOW!!!), the outcome is inevitable.
Remember that word “consumable”? It is consumed, it goes away. It is not a digital widget or a cinder block wall. Once consumed, it needs to be replaced with another one. Last year there was one consumable per person, now it is 1.25 people per consumable? Well…let the bidding begin!
There is a finite amount of consumables we can create. We can allocate only so much land to food (ie: South America), improving yeilds takes time, money brains and inputs. Eventually a limit is reached in the ability to produce consumables.
There is no limit to how many people we can make.
The pace of quality of life improvements worldwide are outstripping the combination of the following: Existing yields less Existing Consumption. Improvements In Volume. Improvements in Yield Per Unit.
This results in Production versus consumption Inflation. This gets heaped onto currency dilution inflation.
Food inflation will outstrip base inflation over the long run is my suspicion. But hey…maybe I’m way wrong here….
Andy – Yup, you’re wrong here….