Food prices saw an increase last month that is the biggest in the past year according to the British Retail Consortium (BRC). A sharp rise in the cost of wheat as well as corn is being blamed for the increase to food prices. Food prices for October were 4.4 per cent higher than a year ago.
The fact that wheat and corn commodities are used as main ingredients of food products as well as for livestock feed means the increase for consumers hits in both staple products, bread and meat. Wheat has seen a 47 per cent increase and corn a 61 per cent increase. Fruit showed the biggest price increase since April 2009 with the cost of transportation as well as poor harvests are being blamed.
Non-food items rose by 1.1 per cent and the overall inflation rate for goods in shops were reported as seeing an increase as well to 2.2 per cent. The average price of clothing and footwear decreased by 1.4 per cent but this is due more to retailers slashing personal profits to compete for consumer spending than anything else. Cotton prices in the past year have seen a very large increase of 90 per cent.
The fact that wheat and corn have continued to see increases is not surprising. Many of the exporters of wheat had difficult growing seasons, including a major exporter Russia. Harvests were so bad due to droughts and fires that all exports were halted in early summer. As wheat prices soared the next go to grain, for both consumption and grain, corn, saw demand increase and thus a price increase.
BRC’s economist Richard Lim said that more increases in food prices will be seen as commodity price increases work their way down to the consumer.
Lim said: “We are probably going to see food price inflation continue to rise for the next few months but we don’t expect it to reach the levels it did in 2008.”