Food Prices Rise At Fastest Rate For A Year
12:42pm UK, Wednesday September 08, 2010
The price of groceries such as bread and cereal is rising at its fastest rate for a year as the cost of wheat rockets.
The cost of bread is rising as wheat prices rocket due to an export ban in Russia
Figures from the British Retail Consortium (BRC) and Nielsen revealed food price inflation rose to 3.8% last month, the highest level since July 2009.
The increase followed a 60% rise in the price of wheat prompted by the continuing export of the grain from Russia.
There are concerns that the wheat ban will also impact on the cost of meat – at a 20-year high already – due to the cost of animal feed.
A third of groceries are now on promotion and customers are shopping around.
Stephen Robertson, BRC director general
Lower meat stocks in major producing countries like Argentina, Australia and the US, would also add to price pressures, a BRC report said.
But the consortium’s director general Stephen Robertson stated current food inflation levels should not be exaggerated.
He said: “We’re nowhere near the return of the double-digit food inflation of two years ago.
“Despite its recent increase, wheat is over a third cheaper than its peak in 2008, while oil prices are virtually half of what they were back then.
Russia is extending its wheat export ban for another 12 months
“In response, retailers are offering more deals. Milk and bread are particularly competitive battlegrounds.
“A third of groceries are now on promotion and customers are shopping around.”
Overall shop price inflation grew more modestly in August to 1.7% from 1.5%.
The report stated shop price inflation should remain low in the coming months, as retailers continue to discount prices amid a weak consumer spending environment.
The Bank of England’s Monetary Policy Committee will weigh up the twin threats of high inflation and weak growth, at a two-day policy meeting.
The MPC is expected to leave interest rates on hold at 0.5% when it announces its decision at noon on Thursday.
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Submited at Thursday, September 9th, 2010 at 12:00 am on Business by nuterman
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