The global spike in food prices is already feeding through to the shops, according to the British Retail Consortium (BRC), a taste of higher inflation to come.
Food inflation rose to its highest in a year last month, to an annual rate of 3.8 per cent, said the BRC, a marked acceleration on July's figure of 2.5 per cent. By contrast, the slow down in the economy limited price rises in other items to just 0.5 per cent on the year, down from 1 per cent in July.
Stephen Robertson, the director general of the BRC, warned: "Past rises in the cost of global commodities, such as wheat and sugar, are filtering through to food prices.
"But 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."
Nonetheless, the BRC figures broadly match those from the Office for National Statistics, which reported a doubling in the annual rate of food price inflation last month, to 3.3 per cent, with food up 1.1 per cent in July alone, an annualised rate of over 12 per cent. Pork was up by 5.4 per cent in July alone, bread by 1.2 per cent and coffee by 3.9 per cent. Tea, fish and fresh fruit is also 10 per cent more expensive than a year ago.
The news will complicate the task facing the Bank of England's Monetary Policy Committee, which meets today and will announce its latest decision on interest rate and quantitative easing (the direct injection of money into the economy), tomorrow. While many surveys of business confidence point to a sharper slow down than expected this autumn, and thus lower inflationary pressure, there is also rising evidence that imported inflation, especially from the recent surge in food and other commodity prices, will feed through to price rises. The Bank predicts inflation will be above the 2 per cent target for the whole of next year.
Inflationary pressure in grain prices, caused by the Russian drought and other freakish weather, has started to trickle through to the cost of animal feedstuffs and thus meat prices. Fertilisers are more expensive for similar reasons, and the recent trend to higher oil prices has inflated transport costs.
The Food and Agriculture Organisation of the United Nations's index of global food price is up 16 per cent on last year and almost a third higher than at the beginning of last year. And while the current peaks may ease, the longer-term pressure, especially on meat prices, seems likely to outlast the current crisis. The rapidly expanding middle-classes of China, India, Brazil, Indonesia and other populous emerging nations show a healthy appetite for more meat and poultry as they grow more prosperous.Reuse content