Higher benchmark prices for cereals will come into effect today, leading almost certainly lead to a second wave of food price inflation globally.
On the Chicago market, wheat and rice prices for delivery in March have jumped to an all-time record, soya bean prices are at a 34-year high and corn prices an 11-year peak, according to the Financial Times.
The data will worry UK food retailers and the Government, which will be concerned about rising inflation at a time when the economy appears to be running out of steam. In the UK, food price inflation was running at an annual 5.1 per cent in October and analysts expect higher food prices to push up overall inflation in November.
In trading on Friday, the new benchmark price of wheat for March delivery rose 26 cents to US$9.795 (£4.87) a bushel, more than 4 per cent higher than the expiring December contract of US$9.39.
Bill Lapp, analyst at US consultancy Advanced Economic Solutions, told the FT: “We’ve already seen food prices increase this year at their fastest pace since the early 1980s, but the full brunt of those increases will begin in earnest in 2008.”
However, Tesco finance director Andrew Higginson said earlier this month that the grocer’s overall price inflation was running at less than 1 per cent, although he admitted prices on some commodities, such as wheat-based ones, were rising.
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