UK Food Price Inflation Soaring
The RPI rate of inflation fell to 0% in March latest figures reveal. Cool, people might be getting their pay frozen, but at least prices in the shops aren't going to go up either so we can still afford to eat right?
Erm, well it might be a little more complicated than that. The RPI data, crucially, includes housing costs. Data from the British Retail Consortium (BRC) reveals that food inflation was 9% in February and March, up from 7.5% in January and 6.2% in December. Meanwhile the cost of non-food items fell by 1.5% in March, adding to a 1.7% drop in February. Clearly combining non-food items and housing costs in with food items is distorting the look of the RPI.
The BRC say that the weak pound is the reason for food prices increasing as retailers are paying more to their suppliers. I can think a few industries that would like to take issue with the BRC on that one.
Meanwhile UK dairy product retail prices according to DairyCo:
Product Mar09 Mar08 % Chg
Liquid Milk 4 Pint Polybottle 153p 134p +14.1
Fresh Cream Double Milk 586ml 168p 161p + 4.3
Butter, Country Life, 250g 96p 96p unch
Cheddar, English Mild, Own Label/kg 661p 608p + 8.7
Cheddar, English Mature, Branded/kg 964p 829p +16.3
So farmgate milk prices are falling month-by-month, whilst food prices in the shops are rising steadily and people are losing their jobs or taking pay freezes. Meanwhile farmers are quitting the industry left right & centre with milk production is at its lowest in 34 years and continuing to fall.
Sounds like a recipe for disaster to me. Still, we can all eat our mobile phones if we're hungry. I can just picture us next Christmas, tucking into Widescreen Plasma TV with all the trimmings.
"These roasted DVD's are lovely, did you burn them yourself?"
"Nah, I got them from Asda, fancy another Nokia, Roy?"
"I'd better not, I've had two already & I'm driving."
You can't drink oil and you can't eat gold
Though state coffers bulge in Saudi Arabia, Abu Dhabi, Qatar, and other countries in the region after to months of sky-high oil prices, soaring food prices have made many people there poorer than a year ago.
These desert nations have been hit especially hard because they have to import more than 80 per cent of the food needed for their rapidly growing populations.
To brake the runaway inflation that is fuelled by high food costs, Gulf rulers have a new strategy: They are buying unused agricultural land in poor countries like Pakistan, Thailand, and Sudan, and becoming large-scale farmers.
In mid-May, Bahrain's minister of industry and commerce, Hassan Fakhro, travelled to Thailand for talks on setting up a plantation there to grow Jasmine rice as an alternative to Basmati rice, which is very popular in Bahrain.
The Dubai-based private equity firm Abraaj Capital aims to work with the government of the United Arab Emirates (UAE) in buying up large tracts of land in Pakistan for the creation of major agribusinesses.
With the state acting as both food producer and trader, the UAE hopes to help lower food prices by eliminating profits by middlemen.
Saudi Arabia and the rich Gulf emirate of Qatar are the countries most interested in Sudan's fertile soil, much of which is unused or used unproductively.
Egypt, with less capital to invest but traditionally having close ties to Khartoum, has already staked a claim in northern Sudan. Cairo has struck a deal with the Sudanese government under President Omar al-Bashir to grow two million acres of wheat annually near Wadi Halfa, not far from the Egyptian border.
The agreement will save Egypt the expense of having to buy wheat overseas, for which it spends a large amount of its foreign-exchange earnings every year.
